As filed with the Securities and Exchange Commission on December 20, 1994
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________
SUNAMERICA CAPITAL, L.P. SUNAMERICA INC.
(Exact name of Registrant as (Exact name of Registrant as
specified in its charter) specified in its charter)
Delaware Maryland
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
Applied for 86-0176061
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1 SunAmerica Center 1 SunAmerica Center
Los Angeles, California 90067-6022 Los Angeles, California 90067-6022
(310) 772-6000 (310) 772-6000
(Address and telephone number (Address and telephone number
of principal executive offices) of principal executive offices)
Susan L. Harris, Esq.
Vice President and General Counsel - Corporate Affairs
SunAmerica Inc.
1 SunAmerica Center
Los Angeles, California 90067-6022
(310) 772-6000
(Name, address and telephone number
of agent for service)
__________
Copies to:
David W. Ferguson, Esq. Gregg A. Noel, Esq.
Davis Polk & Wardwell Skadden, Arps, Slate, Meagher & Flom
450 Lexington Avenue 300 South Grand Avenue, Suite 3400
New York, New York 10017 Los Angeles, California 90071
(212) 450-4000 (213) 687-5000
__________
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: ( )
__________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed maximum
offering price per
Preferred Security or
Amount per Junior Proposed maximum Amount of
Title of each class of to be Subordinated aggregate offering registration
securities to be registered registered Debenture (1) price (1) fee
--------------------------- ----------- ---------------------- ------------------ ------------
<S> <C> <C> <C> <C>
Preferred Securities of SunAmerica
Capital, L.P. and/or Junior Subordinated
Debentures due 2025 of SunAmerica Inc......... 5,500,000 Preferred $24.625 $135,437,500 $46,703.00
Securities(2)
Guarantee of SunAmerica Inc.with respect
to Preferred Securities of SunAmerica
Capital, L.P. (3)............................. -- -- -- --
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1) based on the average of the high and low
prices for SunAmerica Inc.'s 9-1/4% Preferred Stock, Series B on
December 13, 1994.
(2) To the extent participants in the SunAmerica Offer (as defined herein)
elect not to participate in the Partnership Offer (as defined herein)
the number of Preferred Securities issued will be reduced and the
number of Junior Subordinated Debentures delivered to the public will
be increased commensurately.
(3) No separate consideration will be received for the SunAmerica Inc.
Guarantee. Pursuant to Rule 457(a) no separate fee is payable in
respect of the SunAmerica Inc. Guarantee.
</TABLE>
__________
The Registrants hereby amend this registration statement on such date
or dates as may be necessary to delay its effective date until the
Registrants shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this registration
statement shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(a), may determine.
CROSS REFERENCE SHEET
SUNAMERICA INC.
SUNAMERICA CAPITAL, L.P.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4
<TABLE>
<CAPTION>
CAPTION IN OFFERING
FORM S-4 ITEM NO. CIRCULAR/PROSPECTUS
----------------- -------------------
<S> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus. . . . . . . . . . . . . . . Outside Front Cover Page; Inside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover Page; Available Information;
Incorporation of Certain Documents by Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information . . . . . . . . . . . . . . . . . . . Offering Circular/Prospectus Summary; Special
Considerations Relating to the Offers; SunAmerica; The
Partnership; Ratio of Earnings to Fixed Charges; Selected
Consolidated Financial Data
4. Terms of the Transaction. . . . . . . . . . . . . . . . . . The Offers; Description of the Preferred Securities;
Description of the Junior Subordinated Debentures;
Description of the Guarantee; Taxation
5. Pro Forma Financial Information . . . . . . . . . . . . . . Not Applicable
6. Material Contacts with the Company Being
Acquired. . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be
Underwriters. . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
8. Interests of Named Experts and Counsel. . . . . . . . . . . Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities. . . . . . . Not Applicable
10. Information with Respect to S-3 Registrants . . . . . . . . Not Applicable
11. Incorporation of Certain Information by Reference . . . . . Incorporation of Certain Documents by Reference
12. Information with Respect to S-2 or S-3 Registrants. . . . . Not Applicable
13. Incorporation of Certain Information by Reference . . . . . Not Applicable
14. Information with Respect to Registrants Other
than S-3 or S-2 Registrants . . . . . . . . . . . . . . . . Not Applicable
15. Information With Respect to S-3 Companies . . . . . . . . . Not Applicable
16. Information with Respect to S-2 or S-3
Companies . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies . . . . . . . . . . . . . . . . . Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited. . . . . . . . . . . . . Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in an
Exchange Offer. . . . . . . . . . . . . . . . . . . . . . . Incorporation of Certain Documents by Reference
</TABLE>
[Red Herring Language]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER 20, 1994
OFFERING CIRCULAR/PROSPECTUS
SUNAMERICA INC.
OFFER TO EXCHANGE ITS
% JUNIOR SUBORDINATED DEBENTURES DUE 2025
FOR UP TO 5,500,000 OUTSTANDING SHARES OF ITS
9 1/4% PREFERRED STOCK, SERIES B
AND
SUNAMERICA CAPITAL, L.P.
OFFER TO ISSUE ITS
% CUMULATIVE PREFERRED SECURITIES
(liquidation preference $25 per
Preferred Security and
guaranteed to the extent set forth herein
by SunAmerica Inc.)
UPON THE DELIVERY OF % JUNIOR SUBORDINATED
DEBENTURES DUE 2025 TO SUNAMERICA CAPITAL, L.P.
THE SUNAMERICA OFFER, THE PRORATION PERIOD
AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M. NEW YORK CITY TIME, ON FEBRUARY , 1995,
UNLESS THE SUNAMERICA OFFER IS EXTENDED.
THE PARTNERSHIP OFFER AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 5:00 P.M.
NEW YORK CITY TIME, ON FEBRUARY , 1995,
UNLESS THE PARTNERSHIP OFFER IS EXTENDED.
SunAmerica Inc., a Maryland corporation ("SunAmerica"), hereby
offers, upon the terms and subject to the conditions set forth in this
Offering Circular/Prospectus and the accompanying Letter of Transmittal and
Nonparticipation Election Letter (the "Letter of Transmittal" and
"Nonparticipation Election Letter", respectively, which, together with the
Offering Circular/Prospectus, constitute the "SunAmerica Offer"), to exchange
its % Junior Subordinated Debentures due 2025 (the "Junior Subordinated
Debentures") for up to 5,500,000 shares of its outstanding 9 1/4% Preferred
Stock, Series B (the "Series B Preferred"). Exchanges will be made on the
basis of $25 principal amount of Junior Subordinated Debentures for each share
of Series B Preferred validly tendered and accepted for exchange in the
SunAmerica Offer. Shares of Series B Preferred not accepted for exchange
because of proration will be returned.
Concurrently with the SunAmerica Offer, SunAmerica Capital, L.P., a
Delaware limited partnership (the "Partnership"), of which two wholly-owned
subsidiaries of SunAmerica are the sole general partners, hereby offers, upon
the terms and subject to the conditions set forth in this Offering
Circular/Prospectus and the Letter of Transmittal (which, together with the
Nonparticipation Election Letter, constitute the "Partnership Offer"), to
issue its % Cumulative Preferred Securities (the "Preferred Securities") in
exchange for the delivery to the Partnership of any and all Junior
Subordinated Debentures that are being issued in exchange for Series B
Preferred pursuant to the SunAmerica Offer. The Partnership Offer is not
subject to proration. The SunAmerica Offer and the Partnership Offer are
hereinafter referred to together as the "Offers". The Partnership Offer will
be effected on the basis of one Preferred Security for every $25 principal
amount of Junior Subordinated Debentures to be issued to participants by
SunAmerica. Accordingly, holders of Series B Preferred who participate in both
Offers will receive one Preferred Security for each outstanding share of
Series B Preferred that is validly tendered and accepted for exchange.
Holders of Series B Preferred may participate in both Offers by
properly completing and signing the Letter of Transmittal and tendering their
shares of Series B Preferred as described in "The Offers -- Procedures for
Tendering" in accordance with the instructions contained herein and in the
Letter of Transmittal prior to the SunAmerica Expiration Date (as defined
herein). Holders of Series B Preferred who wish to participate in the
SunAmerica Offer, but who do not wish to participate in the Partnership Offer,
must comply with the instructions outlined in the next preceding sentence and,
in addition, must make an election (a "Nonparticipation Election") not to
participate in the Partnership Offer and to retain Junior Subordinated
Debentures by properly completing and signing the Nonparticipation Election
Letter in accordance with the instructions contained herein and in the
Nonparticipation Election Letter as described in "The Offers -- Procedures for
Tendering" prior to the Partnership Expiration Date (as defined herein). In
order to participate in the Offers, holders of Series B Preferred must submit
a Letter of Transmittal and comply with the other procedures for tendering in
accordance with the instructions contained herein and in the Letter of
Transmittal prior to the SunAmerica Expiration Date. After the SunAmerica
Expiration Date, tendering holders of Series B Preferred may not withdraw from
the SunAmerica Offer but may withdraw from the Partnership Offer by making a
Nonparticipation Election prior to the Partnership Expiration Date.
For a description of the other terms of the Offers, see "The Offers
- -- Terms of the Offers"; "-- Expiration Dates; Extensions; Amendments;
Termination"; "-- Withdrawal of Tenders" and "-- Acceptance of Shares and
Proration". SunAmerica and the Partnership expressly reserve the right to
extend, amend or modify the terms of the Offers, and not accept for exchange
any Series B Preferred or Junior Subordinated Debentures, at any time prior to
the SunAmerica Expiration Date for any reason, including (without limitation)
if holders of fewer than 2,810,000 shares of Series B Preferred are tendered
or if, as of the SunAmerica Expiration Date, holders of more than 280,000
shares of Series B Preferred tendered in the SunAmerica Offer have made a
Nonparticipation Election (which conditions may be waived by SunAmerica and
the Partnership). See "The Offers -- Expiration Dates; Extensions;
Amendments; Termination".
The limited partnership interests represented by the Preferred
Securities will have a preference with respect to cash distributions and
amounts payable on redemption or liquidation over the general partners'
interests in the Partnership. Cash distributions on the Preferred Securities
will be cumulative from the first day following the SunAmerica Expiration Date
(the "Accrual Date") at an annual rate of % of the liquidation preference
of $25 per Preferred Security, and will be payable monthly in arrears on the
last day of each month of each year, commencing on the last day of the month
in which the Partnership Expiration Date occurs, when, as and if determined to
be payable ("declared") by the general partners of the Partnership. Cash
distributions in arrears for more than one month will bear interest thereon at
the rate per annum of % of the stated liquidation preference of $25 per
Preferred Security, compounded monthly. The term "dividends" as used herein
includes such cash distributions and any such interest payable unless
otherwise stated. In addition, holders of the Preferred Securities will be
entitled to cash distributions at the rate of 9 1/4% per annum of the
liquidation preference thereof from December 15, 1994 through the SunAmerica
Expiration Date in lieu of dividends accumulating after December 15, 1994 on
their Series B Preferred accepted for exchange, payable at the time of the
first payment of dividends on the Preferred Securities. The payment of
dividends (when, as and if declared) and payments on liquidation of the
Partnership and the redemption of Preferred Securities, as set forth below, are
guaranteed by SunAmerica to the extent described herein (the "Guarantee").
See "Description of the Guarantee". SunAmerica has the right from time to
time to defer the payment of interest on the Junior Subordinated Debentures
for one or more Extension Periods (as defined herein) at the end of each of
which all accrued and unpaid interest is required to be paid in full. If
SunAmerica does not make interest payments on the Junior Subordinated
Debentures, there is a substantial likelihood that the Partnership will not
declare or pay dividends on the Preferred Securities. The Guarantee is a full
and unconditional guarantee from the time of issuance of the Preferred
Securities, but does not apply to any payment of dividends unless and until
such dividends are declared. For a description of redemption rights with
respect to the Preferred Securities, the possible dissolution of the
Partnership and distribution of Junior Subordinated Debentures held by the
Partnership to holders of the Preferred Securities and the liquidation
preference on the Preferred Securities, see "Special Considerations Relating
to the Offers"; "Description of the Preferred Securities -- Optional
Redemption"; "-- Special Event Redemption or Distribution"; "-- Liquidation
Distribution Upon Dissolution" and "Description of the Junior Subordinated
Debentures".
The Junior Subordinated Debentures will mature on , 2025
and will bear interest at an annual rate of % of the principal amount
thereof from the Accrual Date. In addition, holders of the Junior
Subordinated Debentures will be entitled to interest at the rate of 9 1/4% per
annum of the principal amount thereof from December 15, 1994 through the
SunAmerica Expiration Date, in lieu of dividends accumulating after December
15, 1994 on their Series B Preferred accepted for exchange, payable at the
time of the first interest payment on the Junior Subordinated Debentures.
Interest will be payable monthly in arrears on the last day of each month of
each year, commencing on the last day of the month in which the Partnership
Expiration Date occurs; provided that, so long as SunAmerica shall not be in
default in the payment of interest on the Junior Subordinated Debentures,
SunAmerica shall have the right to extend the interest payment period from
time to time for a period not exceeding 60 consecutive months (each, an
"Extension Period"). Prior to the termination of any such Extension Period,
SunAmerica may further extend the interest payment period; provided that such
Extension Period together with all such previous and further extensions
thereof may not exceed 60 consecutive months. No interest shall be due and
payable during an Extension Period, but at the end of such Extension Period
SunAmerica shall pay all interest then accrued and unpaid on the Junior
Subordinated Debentures, together with interest thereon at the rate specified
for the Junior Subordinated Debentures to the extent permitted by applicable
law, compounded monthly ("Compounded Interest"). All references herein to
interest shall include Compounded Interest unless otherwise stated. During
any such Extension Period, SunAmerica may not declare or pay dividends on, or
purchase, acquire or make a distribution or liquidation payment with respect
to, any of its common stock or preferred stock; provided that SunAmerica will
be permitted to pay accrued dividends (or cash in lieu of fractional shares)
upon the conversion of any of its Series D Mandatory Conversion Premium
Dividend Preferred Stock (the "Series D Preferred Stock") in accordance with
the terms of such stock. Upon the termination of any Extension Period and the
payment of all interest then due, SunAmerica may commence a new Extension
Period. SunAmerica may also prepay at any time all or any portion of the
interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths (up to six Extension Periods of
60 consecutive months each or more numerous shorter Extension Periods)
throughout the term of the Junior Subordinated Debentures. See "Special
Considerations Relating to the Offers"; "Description of the Junior
Subordinated Debentures -- Interest" and "-- Option to Extend Interest Payment
Period".
SEE "SPECIAL CONSIDERATIONS RELATING TO THE OFFERS" FOR A DISCUSSION
OF CERTAIN FACTORS RELATING TO THE PREFERRED SECURITIES AND THE JUNIOR
SUBORDINATED DEBENTURES THAT SHOULD BE CONSIDERED BY INVESTORS, INCLUDING THE
PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE PREFERRED
SECURITIES AND JUNIOR SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE RELATED
FEDERAL INCOME TAX CONSEQUENCES.
The Series B Preferred is listed and principally traded on the New
York Stock Exchange, Inc. (the "NYSE"). On December 19, 1994, the last full
day of trading prior to the first public announcement of the SunAmerica Offer
and the Partnership Offer, the closing sales price of the Series B Preferred
on the NYSE as reported on the Composite Tape was $25 3/8 per share.
Stockholders are urged to obtain current market quotations for the Series B
Preferred. To the extent that Series B Preferred is tendered and accepted in
the SunAmerica Offer, the terms on which untendered Series B Preferred could
subsequently be sold could be adversely affected. See "Listing and Trading of
Preferred Securities, Junior Subordinated Debentures and Series B Preferred".
Application will be made to list the Preferred Securities on the
NYSE. However, unlike the Preferred Securities, SunAmerica does not intend to
list the Junior Subordinated Debentures on any exchange. In addition, the
Dealer Manager has advised SunAmerica and the Partnership that, although it
intends to make a market in the Preferred Securities, it does not intend to
make a market in the Junior Subordinated Debentures, and SunAmerica and the
Partnership are not aware of any other person who expects to make such a
market. It is possible that only a small number of Junior Subordinated
Debentures will be held by persons other than the Partnership and therefore,
such securities may be highly illiquid. See "Special Considerations Relating
to the Offers -- Listing and Trading of Preferred Securities and Junior
Subordinated Debentures".
Neither the board of directors of SunAmerica nor SunAmerica nor the
Partnership makes any recommendation to holders as to whether to tender or
refrain from tendering in the Offers.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS OFFERING CIRCULAR/PROSPECTUS,
AND ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THE OFFERS NOR HAS THE COMMISSIONER PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS OFFERING CIRCULAR/PROSPECTUS.
Merrill Lynch & Co. has been retained as Dealer Manager to solicit
exchanges of Series B Preferred for Junior Subordinated Debentures and
exchanges of Junior Subordinated Debentures for Preferred Securities. See
"The Offers -- Dealer Manager". has been retained by SunAmerica to act
as Information Agent to assist in connection with the Offers.
The Dealer Manager for the Offers is:
Merrill Lynch & Co.
The date of this Offering Circular/Prospectus is January , 1995.
DIAGRAM OF OFFERS
[GRAPHIC A]
(SEE APPENDIX A FOR DESCRIPTION OF GRAPHIC MATERIAL)
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFERS OTHER THAN THOSE CONTAINED IN
THIS OFFERING CIRCULAR/PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
SUNAMERICA, THE PARTNERSHIP OR THE DEALER MANAGER. NEITHER THE DELIVERY OF
THIS OFFERING CIRCULAR/PROSPECTUS NOR ANY EXCHANGE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF SUNAMERICA OR THE PARTNERSHIP SINCE THE RESPECTIVE DATES AS OF
WHICH INFORMATION IS GIVEN HEREIN. THE OFFERS ARE NOT BEING MADE TO (NOR WILL
TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF SERIES B PREFERRED IN ANY
JURISDICTION IN WHICH THE MAKING OF THE OFFERS OR THE ACCEPTANCE THEREOF WOULD
NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, SUNAMERICA
AND THE PARTNERSHIP MAY, AT THEIR DISCRETION, TAKE SUCH ACTION AS THEY MAY
DEEM NECESSARY TO MAKE THE OFFERS IN ANY SUCH JURISDICTION AND EXTEND THE
OFFERS TO HOLDERS OF SERIES B PREFERRED IN SUCH JURISDICTION. IN ANY
JURISDICTION THE SECURITIES LAWS OR BLUE SKY LAWS OF WHICH REQUIRE THE OFFERS
TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFERS ARE BEING MADE ON BEHALF
OF SUNAMERICA AND THE PARTNERSHIP BY THE DEALER MANAGER OR ONE OR MORE
REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED UNDER THE LAWS OF SUCH
JURISDICTION.
AVAILABLE INFORMATION
SunAmerica is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information concerning SunAmerica can be inspected
and copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024;
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Such material can also be inspected and copied at the
offices of the NYSE, 20 Broad Street, New York, N.Y. 10005.
This Offering Circular/Prospectus constitutes a part of a
registration statement on Form S-4 (together with all amendments and exhibits,
the "Registration Statement") filed by SunAmerica and the Partnership with the
Commission under the Securities Act of 1933, as amended (the "Securities
Act"). This Offering Circular/Prospectus does not contain all of the
information included in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements contained herein concerning the provisions of any document do not
purport to be complete and, in each instance, are qualified in all respects by
reference to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
subject to and qualified in its entirety by such reference. Reference is made
to such Registration Statement and to the exhibits relating thereto for
further information with respect to SunAmerica, the Partnership and the
securities offered hereby.
No separate financial statements of the Partnership have been
included or incorporated by reference herein. SunAmerica and the Partnership
do not consider that such financial statements would be material to holders of
Preferred Securities because the Partnership is a newly-formed special purpose
entity, has no operating history, has no independent operations and is not
engaged in, and does not propose to engage in, any activity other than its
ownership of debt securities of SunAmerica and its issuance of partnership
interests. See "The Partnership", "Description of the Preferred Securities",
"Description of the Guarantee" and "Description of the Junior Subordinated
Debentures". The Partnership is a limited partnership formed under the laws
of the State of Delaware. SunAmerica, as of the date hereof, indirectly
beneficially owns all of the Partnership's partnership interests. Each holder
of Preferred Securities will be furnished annually with unaudited financial
statements of the Partnership as soon as available after the end of the
Partnership's fiscal year.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
SunAmerica's Annual Report on Form 10-K for the year ended September
30, 1994 has been filed with the Commission and is incorporated herein by
reference.
All documents filed by SunAmerica pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Offering
Circular/Prospectus and prior to the Partnership Expiration Date shall be
deemed to be incorporated by reference in this Offering Circular/Prospectus
and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes
of this Offering Circular/Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified and superseded, to constitute a part of this Offering
Circular/Prospectus.
This Offering Circular/Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. SunAmerica will provide
without charge to each person, including any beneficial owner of the Series B
Preferred, to whom this Offering Circular/Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated herein by reference, other than exhibits to such documents
(unless such exhibits are specifically incorporated by reference into such
documents). Requests for such documents should be directed to Shareholder
Communications of SunAmerica at 1 SunAmerica Center, Los Angeles, California
90067-6022 (Telephone (310) 772-6000). In order to ensure timely delivery of
the documents, any request should be made not later than five business days
prior to the SunAmerica Expiration Date.
TABLE OF CONTENTS
Page
----
Offering Circular/Prospectus Summary..................................... 4
Comparison of Preferred Securities,
Junior Subordinated Debentures and Series B Preferred..................12
Special Considerations Relating to the Offers............................15
SunAmerica...............................................................18
The Partnership..........................................................19
Ratio of Earnings to Fixed Charges.......................................20
Selected Consolidated Financial Data.....................................21
Capitalization...........................................................23
The Offers...............................................................24
Listing and Trading of Preferred
Securities, Junior Subordinated Debentures and Series B Preferred......34
Transactions and Arrangements Concerning the Offers......................35
Fees and Expenses; Transfer Taxes........................................35
Description of the Preferred Securities..................................35
Description of the Guarantee.............................................47
Description of the Junior Subordinated Debentures........................50
Relationship Between the Preferred Securities, the Junior Subordinated
Debentures and the Guarantee...........................................58
Taxation.................................................................59
Legal Matters............................................................64
Experts..................................................................64
ERISA Matters............................................................64
OFFERING CIRCULAR/PROSPECTUS SUMMARY
The following summary does not purport to be complete and is
qualified in its entirety by the detailed information contained elsewhere in
this Offering Circular/Prospectus.
SunAmerica
SunAmerica is a diversified financial services company with more than
$23 billion of assets owned or under management. At September 30, 1994, these
assets consisted of $14.66 billion of assets owned by SunAmerica, $2.17
billion of assets managed in mutual funds and private accounts and $6.54
billion under custody in retirement trust accounts. Together, the SunAmerica
life insurance companies rank among the largest U.S. issuers of individual
annuities. Complementing these annuity operations are SunAmerica's asset
management operations; its two broker-dealers, which SunAmerica believes,
based on industry data, represent the largest network of independent
registered representatives in the nation; and its trust company which provides
administrative and custodial services to qualified retirement plans. Through
these subsidiaries, SunAmerica specializes in the sale of tax-deferred
long-term savings products and investments to the expanding preretirement
savings market. SunAmerica markets fixed annuities and fee-generating
variable annuities, mutual funds and trust services, as well as guaranteed
investment contracts. SunAmerica's products are distributed through a broad
spectrum of financial services distribution channels, including independent
registered representatives of SunAmerica's broker-dealer subsidiaries and
unaffiliated broker-dealers, independent general insurance agents and
financial institutions.
The Partnership
The Partnership is a limited partnership that was formed under the
Delaware Revised Uniform Limited Partnership Act (the "Partnership Act") on
December 16, 1994. The general partners in the Partnership are SunAmerica
Financial, Inc., a Georgia corporation, and Capitol Life Mortgage Corp., a
Delaware corporation (together, the "General Partners"). Each of the General
Partners is a wholly-owned direct or indirect subsidiary of SunAmerica. The
Partnership's agreement of limited partnership will be amended and restated in
its entirety (as so amended and restated, the "Limited Partnership Agreement")
substantially in the form filed as an exhibit to the Registration Statement of
which this Offering Circular/Prospectus forms a part.
The Partnership is managed by the General Partners and exists for the
sole purpose of issuing its partnership interests in exchange for debt
securities of SunAmerica and investing the contributions by the General
Partners and the proceeds of any sale of additional partnership interests in
such debt securities. The rights of the holders of the Preferred Securities,
including economic rights, rights to information and voting rights, are set
forth in the Limited Partnership Agreement (including the action of the
General Partners specifying the terms of the Preferred Securities (the
"Action") taken in accordance with the Limited Partnership Agreement) and the
Partnership Act. The Limited Partnership Agreement does not permit the
incurrence by the Partnership of any indebtedness for borrowed money. The
Limited Partnership Agreement provides that the General Partners shall pay for
all (and the Partnership shall not be obligated to pay, directly or
indirectly, for any) costs and expenses of the Partnership, including any
income taxes, duties and other governmental charges, and all costs and
expenses with respect thereto, to which the Partnership may become subject,
except for United States withholding taxes. See "Special Considerations
Relating to the Offers" and "Description of the Preferred Securities".
The Offers
Purpose of the Offers
The purpose of the Offers is to refinance the Series B Preferred with
the Junior Subordinated Debentures and the Preferred Securities and to achieve
certain tax efficiencies while preserving SunAmerica's flexibility with
respect to future financings. This refinancing will permit SunAmerica to
deduct interest payable on the Junior Subordinated Debentures for United
States federal income tax purposes; dividends payable on the Series B
Preferred are not deductible. See "The Offers -- Purpose of the Offers".
Terms of the Offers
Upon the terms and subject to the conditions set forth herein and in
the Letter of Transmittal and the Nonparticipation Election Letter, SunAmerica
hereby offers to exchange its Junior Subordinated Debentures for up to
5,500,000 outstanding shares of Series B Preferred. Exchanges will be made on
the basis of $25 principal amount of Junior Subordinated Debentures for each
share of Series B Preferred validly tendered and accepted for exchange in the
SunAmerica Offer. See "The Offers -- Terms of the Offers".
Upon the terms and subject to the conditions set forth herein and in
the Letter of Transmittal and the Nonparticipation Election Letter, the
Partnership hereby offers to issue Preferred Securities in exchange for the
delivery to the Partnership of any and all Junior Subordinated Debentures that
are being issued in exchange for Series B Preferred pursuant to the SunAmerica
Offer. The Partnership Offer is not subject to proration. The Partnership
Offer will be effected on the basis of one Preferred Security for every $25
principal amount of Junior Subordinated Debentures to be issued to
participants by SunAmerica. Accordingly, Holders of Series B Preferred who
participate in both Offers will receive one Preferred Security for each
outstanding share of Series B Preferred that is validly tendered and accepted
for exchange.
Expiration Dates; Withdrawals
Upon the terms and conditions of the SunAmerica Offer, including the
provisions relating to proration described herein, SunAmerica will accept for
exchange up to 5,500,000 shares of Series B Preferred, validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on February , 1995, or
if the SunAmerica Offer is extended by SunAmerica, in its sole discretion, the
latest date and time to which the SunAmerica Offer has been extended (the
"SunAmerica Expiration Date"). Tenders of Series B Preferred pursuant to the
SunAmerica Offer may be withdrawn at any time prior to the SunAmerica
Expiration Date and, unless accepted for exchange by SunAmerica, may be
withdrawn at any time after 40 Business Days (as defined herein) after the
date of this Offering Circular/Prospectus. Shares of Series B Preferred not
accepted because of proration will be returned to the tendering Holders at
SunAmerica's expense as promptly as practicable following the SunAmerica
Expiration Date. A "Business Day" shall mean any day other than a day on
which banking institutions in the City of New York are authorized or required
by law to close. See "The Offers -- Withdrawal of Tenders"; "-- Expiration
Dates; Extensions; Amendments; Termination" and "-- Acceptance of Shares and
Proration".
Upon the terms and conditions of the Partnership Offer, the
Partnership will issue Preferred Securities to each Holder of Series B
Preferred who participates in the SunAmerica Offer unless such Holder has made
a Nonparticipation Election prior to 5:00 p.m., New York City time, on the
date which is five days after the SunAmerica Expiration Date, or if the
Partnership Offer is extended by the Partnership, in its sole discretion, the
latest date and time to which the Partnership Offer is extended (the
"Partnership Expiration Date"). If the SunAmerica Offer is extended, a
corresponding extension of the Partnership Offer will be made by the
Partnership. Nonparticipation Elections may be made at any time prior to the
Partnership Expiration Date and, unless Preferred Securities have been issued
by the Partnership, may be made at any time after 40 Business Days after the
date of this Offering Circular/Prospectus. Nonparticipation Elections may be
withdrawn at any time prior to the Partnership Expiration Date by delivering a
written notice of withdrawal. See "The Offers -- Withdrawal of Tenders".
Extensions; Amendments; Termination
SunAmerica and the Partnership expressly reserve the right to (i)
extend, amend or modify the terms of the Offers in any manner and (ii)
withdraw or terminate the Offers and not accept for exchange any Series B
Preferred or Junior Subordinated Debentures, at any time prior to the
SunAmerica Expiration Date for any reason, including (without limitation) if
fewer than 2,810,000 shares of Series B Preferred are tendered or if, as of
the SunAmerica Expiration Date, Holders of more than 280,000 shares of Series
B Preferred tendered in the SunAmerica Offer have made a Nonparticipation
Election (which conditions may be waived by SunAmerica and the Partnership).
See "The Offers -- Expiration Dates; Extensions; Amendments; Termination".
Procedures for Tendering
Each Holder of Series B Preferred wishing to participate in both
Offers must (i) properly complete and sign the Letter of Transmittal or a
facsimile thereof (all references in this Offering Circular/Prospectus to the
Letter of Transmittal shall be deemed to include a facsimile thereof) in
accordance with the instructions contained herein and in the Letter of
Transmittal, together with any required signature guarantees, and deliver the
same to The First National Bank of Chicago, as Exchange Agent, at one of its
addresses set forth in "The Offers -- Exchange Agent and Information Agent"
prior to the SunAmerica Expiration Date and either (a) certificates for the
Series B Preferred must be received by the Exchange Agent at such address or
(b) such Series B Preferred must be transferred pursuant to the procedures for
book-entry transfer described herein and a confirmation of such book-entry
transfer must be received by the Exchange Agent, in each case prior to the
SunAmerica Expiration Date or (ii) comply with the guaranteed delivery
procedures described herein. Any Holder of Series B Preferred who wishes to
participate in the SunAmerica Offer but who does not wish to participate in
the Partnership Offer must comply with the instructions outlined in the next
preceding sentence and, in addition, must make a Nonparticipation Election by
properly completing and signing the Nonparticipation Election Letter or a
facsimile thereof (all references in this Offering Circular/Prospectus to the
Nonparticipation Election Letter shall be deemed to include a facsimile
thereof) in accordance with the instructions contained herein and in the
Nonparticipation Election Letter, together with any required signature
guarantees, and deliver the same to the Exchange Agent, at one of its
addresses set forth in "The Offers -- Exchange Agent and Information Agent"
prior to the Partnership Expiration Date. Any Holder of Series B Preferred who
submits a Letter of Transmittal, tenders shares of Series B Preferred as
described in "The Offers -- Procedures for Tendering" and does not submit a
Nonparticipation Election Letter prior to the Partnership Expiration Date will
thereby have directed SunAmerica to deliver Junior Subordinated Debentures to
the Partnership instead of delivering such Junior Subordinated Debentures to
such Holder, and such Holder will be issued Preferred Securities by the
Partnership on the Closing Date (as defined herein).
In order to participate in the Offers, Holders of Series B Preferred
must submit a Letter of Transmittal and comply with the other procedures for
tendering in accordance with the instructions contained herein and in the
Letter of Transmittal prior to the SunAmerica Expiration Date. After the
SunAmerica Expiration Date, tendering Holders of Series B Preferred may not
withdraw from the SunAmerica Offer but may withdraw from the Partnership Offer
by making a Nonparticipation Election prior to the Partnership Expiration
Date.
LETTERS OF TRANSMITTAL, NONPARTICIPATION ELECTION LETTERS, SERIES B PREFERRED
AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT,
NOT TO SUNAMERICA, THE PARTNERSHIP, THE DEALER MANAGER OR THE INFORMATION
AGENT.
Special Procedure for Beneficial Owners
Any beneficial owner whose Series B Preferred is registered in the
name of a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender such Series B Preferred should contact such registered
Holder promptly and instruct such registered Holder to tender on such
beneficial owner's behalf. If such beneficial owner wishes to tender on its
own behalf, such owner must, prior to completing and executing a Letter of
Transmittal and delivering its Series B Preferred, either make appropriate
arrangements to register ownership of the Series B Preferred in such owner's
name or obtain a properly completed stock power from the registered Holder.
The transfer of registered ownership may take considerable time and may not be
able to be completed prior to the SunAmerica Expiration Date. See "The Offers
- -- Procedures for Tendering -- Special Procedure for Beneficial Owners".
Guaranteed Delivery Procedures
If a Holder desires to accept both Offers or only the SunAmerica
Offer and time will not permit a Letter of Transmittal or Series B Preferred
to reach the Exchange Agent before the SunAmerica Expiration Date or the
procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected in accordance with the guaranteed delivery procedures
set forth in "The Offers -- Procedures for Tendering -- Guaranteed Delivery".
Acceptance of Shares and Proration
Upon the terms and subject to the conditions of the SunAmerica Offer,
if 5,500,000 or fewer shares of Series B Preferred have been validly tendered
and not withdrawn prior to the SunAmerica Expiration Date, SunAmerica will
accept for exchange all such shares of Series B Preferred. Upon the terms and
subject to the conditions of the SunAmerica Offer, if more than 5,500,000
shares of Series B Preferred (or, if decreased as described herein, such
lesser number as SunAmerica may elect to purchase pursuant to the SunAmerica
Offer) have been validly tendered and not withdrawn prior to the SunAmerica
Expiration Date, SunAmerica will accept for exchange shares of Series B
Preferred from each tendering Holder on a pro rata basis, subject to
adjustment to avoid the acceptance for exchange of fractional shares.
If SunAmerica decreases the amount of Series B Preferred sought, and
the SunAmerica Offer is scheduled to expire less than ten Business Days from
and including the date that notice of such decrease is first published, sent
or given in the manner specified in "Terms of the Offers -- Expiration Dates;
Extensions; Amendments; Termination", then the SunAmerica Offer will be
extended for ten Business Days from and including the date of such notice.
All shares of Series B Preferred not accepted pursuant to the
SunAmerica Offer, including shares not purchased because of proration, will be
returned to the tendering Holders at SunAmerica's expense as promptly as
practicable following the SunAmerica Expiration Date.
Upon the terms and subject to the conditions of the Partnership
Offer, the Partnership will issue Preferred Securities in exchange for the
delivery to the Partnership of any and all Junior Subordinated Debentures that
are being issued in exchange for Series B Preferred pursuant to the SunAmerica
Offer.
The Partnership Offer is not subject to proration.
Delivery of Preferred Securities
and/or Junior Subordinated Debentures
Subject to the terms and conditions of the Offers, the delivery of
the Junior Subordinated Debentures to be delivered to the Partnership and to
participants in the SunAmerica Offer who have made a Nonparticipation Election
prior to the Partnership Expiration Date and of the Preferred Securities to be
issued pursuant to the Partnership Offer will occur as promptly as practicable
on a single settlement date (the "Closing Date") following the Partnership
Expiration Date. See "The Offers -- Terms of the Offers" and "-- Expiration
Dates; Extensions; Amendments; Termination".
If proration of tendered shares of Series B Preferred is required,
because of the difficulty in determining the number of shares of Series B
Preferred validly tendered (including shares tendered by the guaranteed
delivery procedures described in "Terms of the Offers -- Procedures for
Tendering"), SunAmerica does not expect that it would be able to announce the
final proration factor or to commence the exchange for any shares of Series B
Preferred pursuant to the SunAmerica Offer until approximately seven Business
Days after the SunAmerica Expiration Date. Preliminary results of the
proration will be announced by press release as promptly as practicable after
the SunAmerica Expiration Date. Holders of shares of Series B Preferred may
obtain such preliminary information from the Dealer Manager or the Information
Agent and may also be able to obtain such information from their brokers.
Description of Securities Offered
The Preferred Securities represent limited partnership interests in
the Partnership. The limited partnership interests represented by the
Preferred Securities will have a preference to the General Partners' interests
in the Partnership with respect to dividends and amounts payable on redemption
or liquidation. The Limited Partnership Agreement does not permit the
issuance of any SunAmerica Capital Preferred Securities (as defined herein)
ranking, as to participation in profits and dividends and in the assets of the
Partnership, senior or junior to the Preferred Securities or the incurrence of
any indebtedness for borrowed money by the Partnership.
The dividends payable on each Preferred Security will be fixed at a
rate per annum of % of the stated liquidation preference of $25 per
Preferred Security. Dividends in arrears for more than one month will bear
interest thereon at the rate per annum of % of the stated liquidation
preference of $25 per Preferred Security, compounded monthly. Dividends on
the Preferred Securities will be cumulative, will accrue from the Accrual Date
and will be payable monthly in arrears, on the last day of each month of each
year, commencing on the last day of the month in which the Partnership
Expiration Date occurs, when, as and if declared by the General Partners,
except as otherwise described herein. In addition, holders of Preferred
Securities will be entitled to cash distributions at the rate of 9 1/4% per
annum of the liquidation preference thereof from December 15, 1994 through the
SunAmerica Expiration Date in lieu of dividends accumulating after December 15,
1994 on their Series B Preferred accepted for exchange, payable at the time of
the first payment of dividends on the Preferred Securities.
SunAmerica has the right under the Indenture (as defined herein) to
extend the interest payment period from time to time on the Junior
Subordinated Debentures for a period not exceeding 60 consecutive months and,
as a consequence, monthly dividends on the Preferred Securities would likely
not be paid (but would continue to accrue with interest thereon at the rate of
% per annum, compounded monthly) by the Partnership during any such
Extension Period. If SunAmerica exercises this right, SunAmerica may not
declare or pay dividends on, or purchase, acquire or make a distribution or
liquidation payment with respect to, any of its common stock or preferred
stock during such Extension Period; provided that SunAmerica will be permitted
to pay accrued dividends (or cash in lieu of fractional shares) upon the
conversion of any of its Series D Preferred Stock in accordance with the terms
of such stock. Prior to the termination of any such Extension Period,
SunAmerica may further extend such Extension Period; provided that such
Extension Period together with all such previous and further extensions thereof
may not exceed 60 consecutive months. Upon the termination of any Extension
Period and the payment of all amounts then due, SunAmerica may commence a new
Extension Period, subject to the above requirements. SunAmerica may also
prepay at any time all or any portion of the interest accrued during an
Extension Period. Consequently, there could be multiple Extension Periods of
varying lengths (up to six Extension Periods of 60 consecutive months each or
more numerous shorter Extension Periods) throughout the term of the Junior
Subordinated Debentures. See "Special Considerations Relating to the Offers";
"Description of the Junior Subordinated Debentures -- Interest" and "-- Option
to Extend Interest Payment Period".
The Partnership will hold (i) the Junior Subordinated Debentures that
are being issued in exchange for Series B Preferred to those participants in
the SunAmerica Offer who do not make a Nonparticipation Election with respect
to the Partnership Offer prior to the Partnership Expiration Date and (ii)
Junior Subordinated Debentures purchased with the proceeds of the General
Partners' capital contributions (the "General Partners' Payments"). Under the
Limited Partnership Agreement, if and to the extent SunAmerica does make
interest payments on the Junior Subordinated Debentures held by the
Partnership, the Partnership is obligated, to the extent funds are legally
available therefor, to declare dividends on the Preferred Securities. The
payment of dividends (if and to the extent declared) and payments on
liquidation of the Partnership and the redemption of Preferred Securities, as
set forth below, are guaranteed by SunAmerica as and to the extent set forth
under "Description of the Guarantee". The Guarantee is a full and
unconditional guarantee from the time of issuance of the Preferred Securities,
but does not apply to any payment of dividends unless and until such dividends
are declared.
The Preferred Securities are redeemable, at the option of the
Partnership, in whole or in part, from time to time, on or after June 15,
1997, upon not less than 30 nor more than 60 days' notice, at $25 per
Preferred Security plus accrued and unpaid dividends thereon to the date of
redemption (the "Redemption Price"), payable in cash. The Preferred
Securities have no maturity date, although they are, subject to certain
exceptions, mandatorily redeemable upon the maturity or earlier redemption or
repurchase of the Junior Subordinated Debentures held by the Partnership. See
"Description of the Preferred Securities -- Mandatory Redemption".
In addition, upon the occurrence of certain special events arising
from a change in law or a change in legal interpretation or other specified
circumstances, the Preferred Securities are redeemable in whole at the
Redemption Price at the option of the General Partners, or the General
Partners may dissolve the Partnership and cause to be distributed to the
holders of the Preferred Securities, on a pro rata basis, the Junior
Subordinated Debentures then held by the Partnership in lieu of any cash
distribution. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution".
The Junior Subordinated Debentures will be issued pursuant to an
indenture, to be dated as of , 1995 (as supplemented by the First
Supplemental Indenture (the "First Supplemental Indenture") to be dated as of
, 1995, the "Indenture") between SunAmerica and First National Bank
of Chicago, as trustee. See "Description of the Junior Subordinated
Debentures". The Junior Subordinated Debentures will mature on ,
2025 and will bear interest at an annual rate of % from the Accrual
Date. Interest will be payable monthly in arrears on the last day of each
month of each year, commencing on the last day of the month in which the
Partnership Expiration Date occurs; provided that, as described above, so long
as SunAmerica shall not be in default in the payment of interest on the Junior
Subordinated Debentures, SunAmerica shall have the right to extend the interest
payment period from time to time for a period not exceeding 60 consecutive
months. SunAmerica has no current intention of exercising its right to extend
an interest payment period. However, should SunAmerica determine to exercise
such right in the future, the market price of the Preferred Securities and any
Junior Subordinated Debentures held by former Holders of Series B Preferred is
likely to be affected. See "Special Considerations Relating to the Offers"
and "Description of the Junior Subordinated Debentures -- Option to Extend
Interest Payment Period".
Dividends accumulated after December 15, 1994 will not be paid on
Series B Preferred accepted for exchange in the SunAmerica Offer. In lieu
thereof, holders of the Junior Subordinated Debentures will be entitled to
interest at the rate of 9 1/4% per annum of the principal amount thereof from
December 15, 1994 through the SunAmerica Expiration Date, payable at the time
of the first interest payment on the Junior Subordinated Debentures. No
extension of interest will be permitted with respect to interest accruing from
December 15, 1994 through the SunAmerica Expiration Date.
SunAmerica shall have the right to redeem the Junior Subordinated
Debentures, in whole or in part, from time to time, on or after June 15, 1997,
upon not less than 30 nor more than 60 days' notice, at a redemption price
equal to 100% of the principal amount to be redeemed, plus any accrued and
unpaid interest, to the redemption date, payable in cash.
Certain United States Federal Income Tax Considerations
The exchange of Series B Preferred for Junior Subordinated Debentures
pursuant to the SunAmerica Offer will be a taxable transaction. Gain or loss
generally will be recognized in an amount equal to the difference between the
fair market value on the SunAmerica Expiration Date of the Junior Subordinated
Debentures received in the exchange and the exchanging Holder's tax basis in
the shares of Series B Preferred surrendered. For this purpose, because the
Series B Preferred is traded on the NYSE, the fair market value of the Junior
Subordinated Debentures issued in exchange for Series B Preferred on the
SunAmerica Expiration Date is expected to be equal to the trading price of the
Series B Preferred on that date. The issuance of Preferred Securities to
former Holders of Series B Preferred pursuant to the Partnership Offer will
not be a taxable event. See "Taxation -- Exchange of Series B Preferred and
Issuance of Preferred Securities".
The Junior Subordinated Debentures will be treated as issued with
"original issue discount" for United States federal income tax purposes.
Holders of Junior Subordinated Debentures will be required to include interest
as it accrues in gross income in advance of the receipt of cash. See
"Taxation -- Original Issue Discount on the Junior Subordinated Debentures"
and "-- Potential Extension of Payment Period on the Junior Subordinated
Debentures".
Holders of Preferred Securities will be required to include in gross
income their distributive share of the Partnership's income from the Junior
Subordinated Debentures, which will generally be equal to the amount of stated
interest on the Junior Subordinated Debentures. Should an Extension Period
occur with respect to the Junior Subordinated Debentures, holders of Preferred
Securities will be required to include interest accruing on the Junior
Subordinated Debentures in gross income for United States federal income tax
purposes in advance of the receipt of cash. See "Taxation -- Income from the
Preferred Securities".
No portion of the amounts received on the Preferred Securities will
be eligible for the dividends received deduction.
Untendered Shares
Holders of Series B Preferred who do not tender their Series B
Preferred in the SunAmerica Offer or whose Series B Preferred is not accepted
for exchange will continue to hold such Series B Preferred and will be
entitled to all the rights and preferences, and will be subject to all of the
limitations, applicable thereto. Holders of Series B Preferred who
participate in the SunAmerica Offer but who do not participate in the
Partnership Offer will be issued Junior Subordinated Debentures and will be
entitled to all the rights and preferences, and will be subject to all of the
limitations, applicable thereto. See "Listing and Trading of Preferred
Securities, Junior Subordinated Debentures and Series B Preferred".
Exchange Agent and Information Agent
The First National Bank of Chicago has been appointed as Exchange
Agent in connection with the Offers. Questions and requests for assistance,
requests for additional copies of this Offering Circular/Prospectus or of the
Letter of Transmittal and Nonparticipation Election Letter and requests for
Notices of Guaranteed Delivery should be directed to , which has been
retained by SunAmerica to act as Information Agent for the Offers. The
addresses and telephone numbers of the Exchange Agent and the Information
Agent are set forth in "The Offers -- Exchange Agent and Information Agent"
and on the outside back cover of this Offering Circular/Prospectus.
Dealer Manager
Merrill Lynch & Co. has been retained as Dealer Manager in connection
with the Offers. Questions with respect to the Offers may be directed to
at .
COMPARISON OF PREFERRED SECURITIES,
JUNIOR SUBORDINATED DEBENTURES AND SERIES B PREFERRED
The following is a brief summary of certain terms of the Preferred
Securities, the Junior Subordinated Debentures and the Series B Preferred.
For a more complete description of the Preferred Securities and the Junior
Subordinated Debentures, see "Description of the Preferred Securities" and
"Description of the Junior Subordinated Debentures".
<TABLE>
<CAPTION>
Junior Subordinated
Preferred Securities Debentures Series B Preferred
------------------------------ ---------------------- --------------------------
<S> <C> <C> <C>
Issuer The Partnership. Payment of SunAmerica SunAmerica
distributions and on
liquidation or redemption is
guaranteed to the extent
described herein by
SunAmerica.
Dividend/Interest Rate % per annum dividend % per annum interest 9 1/4% per annum dividend
payable monthly, from and payable monthly from and payable on the 15th day of
including the Accrual Date, including the Accrual March, June, September and
out of funds legally available Date, subject to December of each year, out
therefor, when, as and if SunAmerica's right to of funds legally available
declared by the General extend the interest therefor, when, as and if
Partners. During any payment period from time declared by SunAmerica's
Extension Period on the Junior to time for an Extension Board of Directors.
Subordinated Debentures, Period not exceeding 60 Dividends are cumulative.
dividend payments on the consecutive months. Accumulated unpaid
Preferred Securities would During any Extension dividends do not bear
likely not be made but would Period, interest would interest.
continue to accrue, and, in continue to accrue,
the case of dividends in compounded monthly.
arrears for more than one
month, would bear interest at
the rate of % per annum,
compounded monthly.
Optional Redemption Redeemable at the option of Redeemable at the option Redeemable at the option
the Partnership on and after of SunAmerica on and of SunAmerica on and after
June 15, 1997, in whole or in after June 15, 1997, in June 15, 1997, in whole or
part, at a redemption price whole or in part, at a in part, at a redemption
equal to 100% of the redemption price equal price equal to 100% of the
liquidation preference of the to 100% of the principal liquidation preference of
Preferred Securities to be amount of Junior the shares to be redeemed,
redeemed, plus accrued and Subordinated Debentures plus accrued and unpaid
unpaid dividends, if any, to to be redeemed, plus dividends, if any, to the
the redemption date. accrued and unpaid redemption date.
interest, if any, to the
redemption date.
Maturity/Mandatory The Preferred Securities have The Junior Subordinated None.
Redemption no stated maturity but must be Debentures mature on
redeemed no later than , , 2025 and are
2044. However, redemption may not subject to mandatory
be required prior to such redemption prior to that
date. See "Description of the date.
Preferred Securities --
Mandatory Redemption".
Subordination Subordinated to claims of Subordinated to all Subordinated to claims of
creditors of the Partnership, existing and future creditors of SunAmerica,
if any. The Partnership is Senior Indebtedness (as including holders of
not permitted to incur any defined herein) of SunAmerica's outstanding
indebtedness for borrowed SunAmerica, and effectively debt securities and the
money. The Limited subordinated to all obligations Junior Subordinated
Partnership Agreement provides of SunAmerica's subsidiaries, but Debentures, and effectively
that the General Partners senior to preferred stock of subordinated to all obligations
shall pay for all (and the SunAmerica, including of SunAmerica's subsidiaries,
Partnership shall not be the Series B Preferred, but senior to the common
obligated to pay, directly or and to the common stock stock of SunAmerica.
indirectly, for any) costs and of SunAmerica. On
expenses of the Partnership, September 30, 1994,
including any income taxes, approximately
duties and other governmental $738,189,000 of such
charges, and all costs and Senior Indebtedness and
expenses with respect thereto, approximately
to which the Partnership may $8,171,532,000 of
become subject, except for additional indebtedness
United States withholding and other liabilities of
taxes. SunAmerica's SunAmerica's
obligations under the subsidiaries (excluding
Guarantee will rank variable annuity
subordinate and junior to all liabilities, with
other liabilities of respect to which assets
SunAmerica, including the are segregated in
Junior Subordinated separate accounts) not
Debentures, except those made included in Senior
pari passu or subordinate by Indebtedness were
their terms, and effectively outstanding.
subordinated to all
obligations of SunAmerica's
subsidiaries, and senior to
all capital stock now or
hereafter issued by SunAmerica
and to any guarantee now or
hereafter entered into by
SunAmerica in respect of any
of its capital stock.
Listing Application will be made to None, except that if The Series B Preferred is
list the Preferred Securities those held by the listed on the NYSE.
on the NYSE. Partnership are
distributed by the
Partnership in a
liquidation, SunAmerica
will use its best
efforts to list the
Junior Subordinated
Debentures on the NYSE
or on such other
exchange on which the
Preferred Securities are
then listed.
Dividends Received Dividends are not eligible for Interest is not eligible Dividends are eligible for
Deduction the dividends received for the dividends the dividends received
deduction for corporate received deduction for deduction for corporate
holders. corporate holders. holders.
Voting Rights/ Holders of Preferred Subject to SunAmerica's If dividends shall be in
Enforcement Securities have no voting right to extend payment arrears in an aggregate
rights unless either (i) as described under amount equivalent to six
dividends on the Preferred "Dividend/Interest quarterly dividend
Securities shall be in arrears Rate", holders have the payments, the Holders have
for 18 consecutive monthly right to receive the right (together with
dividend periods; (ii) an interest and principal other classes of preferred
Event of Default (as defined payments as and when stock ranking on a parity
herein) occurs and is due, but do not have any with the Series B
continuing on the Junior voting rights. Preferred either as to
Subordinated Debentures; or dividends or on the
(iii) SunAmerica is in default distribution of assets
on any of its payment upon liquidation) to elect
obligations under the two directors.
Guarantee, in which case
holders have the right to
appoint a Special
Representative authorized to
enforce the Partnership's
creditor rights under the
Junior Subordinated
Debentures, the holders'
rights under the Guarantee and
the rights of the holders to
receive dividends (if and to
the extent declared). If the
Partnership's failure to pay
dividends is a consequence of
SunAmerica's exercise of its
right to extend the interest
payment period for the Junior
Subordinated Debentures as
described under "Dividend/
Interest Rate", the Special
Representative will have no
right to enforce the payment
of dividends until an Event of
Default shall have occurred.
</TABLE>
SPECIAL CONSIDERATIONS RELATING TO THE OFFERS
Prospective exchanging Holders of Series B Preferred who plan to
participate in both Offers or only in the SunAmerica Offer should carefully
consider, in addition to the other information set forth elsewhere in this
Offering Circular/Prospectus, the following:
Tax Consequences of the Offers
The exchange of Series B Preferred for Junior Subordinated Debentures
pursuant to the SunAmerica Offer will be a taxable event, whether or not the
exchanging Holder participates in the Partnership Offer. Generally, gain or
loss will be recognized in an amount equal to the difference between the fair
market value on the SunAmerica Expiration Date of the Junior Subordinated
Debentures received in the exchange and the exchanging Holder's tax basis in
the Series B Preferred exchanged therefor. The issuance of Preferred
Securities pursuant to the Partnership Offer will not be a taxable event. See
"Taxation -- Exchange of Series B Preferred and Issuance of Preferred
Securities". All Holders of Series B Preferred are advised to consult their
tax advisors regarding the United States federal, state, local and foreign tax
consequences of the exchange of Series B Preferred and the issuance of
Preferred Securities.
Subordination of Guarantee and Junior Subordinated Debentures;
Dependence on SunAmerica and the General Partners
SunAmerica's obligations under the Guarantee are subordinate and
junior in right of payment to all other liabilities of SunAmerica except those
made pari passu (that is, equal in priority) or subordinate by their terms to
the Guarantee. The obligations of SunAmerica under the Junior Subordinated
Debentures described under "Description of the Junior Subordinated Debentures"
are unsecured obligations of SunAmerica and will be subordinate and junior in
right of payment to Senior Indebtedness of SunAmerica but senior to its
capital stock. At September 30, 1994, Senior Indebtedness of SunAmerica (on an
unconsolidated basis) aggregated approximately $738,189,000. Because
SunAmerica is a holding company, the Junior Subordinated Debentures (and
SunAmerica's obligations under the Guarantee) are also effectively
subordinated to all existing and future liabilities, including trade payables,
of SunAmerica's subsidiaries, except to the extent that SunAmerica is a
creditor of the subsidiaries recognized as such. At September 30, 1994,
SunAmerica's subsidiaries had outstanding approximately $8,171,532,000 of
indebtedness and other liabilities (excluding variable annuity liabilities,
with respect to which assets are segregated in separate accounts). There are
no terms in the Preferred Securities, the Junior Subordinated Debentures or the
Guarantee that limit SunAmerica's ability to incur additional indebtedness,
including indebtedness that ranks senior to or pari passu with the Junior
Subordinated Debentures and the Guarantee, or the ability of its subsidiaries
to incur additional indebtedness. See "Description of the Guarantee -- Status
of the Guarantee" and "Description of the Junior Subordinated Debentures --
Subordination".
The Partnership's ability to pay dividends on the Preferred
Securities is solely dependent upon SunAmerica making interest payments on the
Junior Subordinated Debentures held by the Partnership as and when required.
If SunAmerica were for any reason to be unable to make payments on the Junior
Subordinated Debentures held by the Partnership as and when required, there is
a substantial likelihood that SunAmerica, in its capacity as Guarantor, would
be unable to make payments on the Guarantee as and when required.
SunAmerica's obligations under the Guarantee are unsecured and, on a
liquidation or winding up of SunAmerica, its obligations under the Guarantee
will rank junior to all of its other liabilities (including the Junior
Subordinated Debentures), except those made pari passu by their terms.
The Limited Partnership Agreement provides that the General Partners
shall pay for all (and the Partnership shall not be obligated to pay, directly
or indirectly, for any) costs and expenses of the Partnership, including any
income taxes, duties and other governmental charges, and all costs and
expenses with respect thereto, to which the Partnership may become subject,
except for United States withholding taxes. No assurance can be given that
the General Partners will have sufficient resources to enable them to pay such
costs and expenses on behalf of the Partnership.
Option to Extend Interest Payment Period; Tax Impact of Extension
SunAmerica has the right under the Indenture to extend the interest
payment period from time to time on the Junior Subordinated Debentures for an
Extension Period not exceeding 60 consecutive months, during which no interest
shall be due and payable. Monthly dividends on the Preferred Securities would
likely not be paid (but would continue to accrue with interest thereon at the
rate of % per annum, compounded monthly) by the Partnership during any
such Extension Period. If SunAmerica exercises the right to extend an
interest payment period, SunAmerica may not during such Extension Period
declare or pay dividends on, or purchase, acquire or make a distribution or
liquidation payment with respect to, any of its common stock or preferred
stock; provided that SunAmerica will be permitted to pay accrued dividends (or
cash in lieu of fractional shares) upon the conversion of any of its Series D
Preferred Stock. SunAmerica has outstanding 5,002,500 $2.78 Depositary Shares
(the "Series D Depositary Shares"), each representing one-fiftieth of a share
of Series D Preferred Stock. Dividends accrue on each Series D Depositary
Share at the rate of $2.78 per year. On March 1, 1996, unless previously
redeemed, each of the outstanding Series D Depositary Shares will convert into
one share of SunAmerica's common stock and the right to receive an amount in
cash equal to all accrued and unpaid dividends.
Prior to the termination of any Extension Period, SunAmerica may
further extend such Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed
60 consecutive months. Upon the termination of any Extension Period and the
payment of all amounts then due, SunAmerica may commence a new Extension
Period, subject to the above requirements. SunAmerica may also prepay at any
time all or any portion of the interest accrued during an Extension Period.
Consequently, there could be multiple Extension Periods of varying lengths (up
to six Extension Periods of 60 consecutive months each or more numerous
shorter Extension Periods) throughout the term of the Junior Subordinated
Debentures. See "Description of the Preferred Securities -- Dividends" and
"Description of the Junior Subordinated Debentures -- Option to Extend Interest
Payment Period".
Because SunAmerica has the right to extend the interest payment
period up to 60 months on various occasions, the Junior Subordinated
Debentures will be treated as issued with "original issue discount" for United
States federal income tax purposes. As a result, holders of Junior
Subordinated Debentures will be required to include interest accruing on the
Junior Subordinated Debentures in gross income for United States federal
income tax purposes in advance of the receipt of cash. See "Taxation --
Potential Extension of Payment Period on the Junior Subordinated Debentures".
Should an Extension Period occur, holders of Preferred Securities
will be required to include interest accruing on the Junior Subordinated
Debentures in gross income for United States federal income tax purposes in
advance of the receipt of cash. See "Taxation -- Income from the Preferred
Securities".
Listing and Trading of Preferred Securities and Junior Subordinated Debentures
The Preferred Securities constitute a new issue of securities with
no established trading market. While the Partnership intends to list the
Preferred Securities on the NYSE, there can be no assurance that an active
market for the Preferred Securities will develop or be sustained in the future
on such exchange. Although the Dealer Manager has indicated to SunAmerica and
the Partnership that it intends to make a market in the Preferred Securities
as permitted by applicable laws and regulations prior to the commencement of
trading on the NYSE, it is not obligated to do so and may discontinue any such
market-making at any time without notice. Accordingly, no assurance can be
given as to the liquidity of, or trading markets for, the Preferred Securities.
The Junior Subordinated Debentures also constitute a new issue of
securities with no established trading market. SunAmerica does not intend to
list the Junior Subordinated Debentures on any exchange and, accordingly, no
assurance can be given as to the liquidity of, or trading markets for, the
Junior Subordinated Debentures. In addition, the Dealer Manager has advised
SunAmerica and the Partnership that, although it intends to make a market in
the Preferred Securities, it does not intend to make a market in the Junior
Subordinated Debentures, and SunAmerica and the Partnership are not aware of
any other person who expects to make such a market. It is possible that only
a small number of Junior Subordinated Debentures will be held by persons other
than the Partnership and therefore, such securities may be highly illiquid. If
the Junior Subordinated Debentures are distributed to the holders of Preferred
Securities upon the dissolution of the Partnership, SunAmerica will use its
best efforts to list the Junior Subordinated Debentures on the NYSE or on such
other exchange on which the Preferred Securities are then listed.
To the extent that Series B Preferred is tendered and accepted in the
SunAmerica Offer, the terms on which untendered Series B Preferred could
subsequently be sold could be adversely affected.
Special Event Redemption or Distribution
Subject to the following sentence, upon the occurrence and during the
continuation of a Special Event (as defined herein), which may occur at any
time, the General Partners shall elect either to (i) redeem the Preferred
Securities in whole at the Redemption Price or (ii) dissolve the Partnership
and, in the manner described in "Description of the Preferred Securities --
Liquidation Distribution Upon Dissolution", cause Junior Subordinated
Debentures held by the Partnership having an aggregate principal amount equal
to the aggregate stated liquidation preference of, with an interest rate
identical to the dividend rate of, and accrued and unpaid interest equal to
accrued and unpaid dividends (whether or not declared) on, the Preferred
Securities to be distributed to the holders of the Preferred Securities in
liquidation of the Partnership. In the case of a Special Event that is a Tax
Event (as defined herein), however, the General Partners may, as an
alternative to electing to redeem the Preferred Securities or dissolving the
Partnership, elect to cause the Preferred Securities to remain outstanding.
There can be no assurance as to the market prices for the Junior Subordinated
Debentures which may be distributed in exchange for Preferred Securities if a
dissolution and liquidation of the Partnership were to occur. Accordingly,
the Preferred Securities or the Junior Subordinated Debentures which the
investor may receive may trade at a discount to the price of the Series B
Preferred exchanged. See "Description of the Preferred Securities -- Special
Event Redemption or Distribution" and "Description of the Junior Subordinated
Debentures -- General".
Under current United States federal income tax law, a distribution
of the Junior Subordinated Debentures upon a Special Event would not be a
taxable event to holders of the Preferred Securities. Under a change in law
giving rise to a Special Event, however, the dissolution could be a taxable
event to holders of the Preferred Securities. See "Taxation -- Distribution
of Junior Subordinated Debentures to Holders of Preferred Securities".
Potential Market Volatility During Extension Period
As described above, SunAmerica has the right to extend an interest
payment period from time to time for a period not exceeding 60 consecutive
months. If SunAmerica determines to extend an interest payment period, or if
SunAmerica thereafter extends an Extension Period or prepays interest accrued
during an Extension Period as described above, the market prices of the
Preferred Securities and the Junior Subordinated Debentures held by any former
Holders of Series B Preferred are likely to be affected. In addition, as a
result of such rights, the market price of the Junior Subordinated Debentures
may be more volatile than other debt instruments with original issue discount
that do not have such rights. A holder that disposes of its Preferred
Securities or Junior Subordinated Debentures during an Extension Period,
therefore, may not receive the same return on its investment as a holder that
continues to hold its Preferred Securities or Junior Subordinated Debentures.
See "Description of the Junior Subordinated Debentures -- Option to Extend
Interest Payment Period".
SUNAMERICA
SunAmerica is a diversified financial services company with more than
$23 billion of assets owned or under management. At September 30, 1994, these
assets consisted of $14.66 billion of assets owned by SunAmerica, $2.17
billion of assets managed in mutual funds and private accounts and $6.54
billion under custody in retirement trust accounts. Together, the SunAmerica
life insurance companies rank among the largest U.S. issuers of individual
annuities. Complementing these annuity operations are SunAmerica's asset
management operations; its two broker-dealers, which SunAmerica believes,
based on industry data, represent the largest network of independent
registered representatives in the nation; and its trust company which provides
administrative and custodial services to qualified retirement plans. Through
these subsidiaries, SunAmerica specializes in the sale of tax-deferred
long-term savings products and investments to the expanding preretirement
savings market. SunAmerica markets fixed annuities and fee-generating
variable annuities, mutual funds and trust services, as well as guaranteed
investment contracts. SunAmerica's products are distributed through a broad
spectrum of financial services distribution channels, including independent
registered representatives of SunAmerica's broker-dealer subsidiaries and
unaffiliated broker-dealers, independent general insurance agents and
financial institutions.
The principal executive offices of SunAmerica are located at 1
SunAmerica Center, Los Angeles, California 90067-6022, telephone number (310)
772-6000.
THE PARTNERSHIP
The Partnership is a limited partnership that was formed under the
Partnership Act on December 16, 1994. The initial partners in the Partnership
are SunAmerica Financial, Inc. and Capitol Life Mortgage Corp., as General
Partners, and SunAmerica, as initial limited partner. Upon the issuance of
Preferred Securities, which securities represent limited partnership interests
in the Partnership, SunAmerica will withdraw as a limited partner of the
Partnership. Each of the General Partners is a wholly-owned direct or
indirect subsidiary of SunAmerica. The General Partners and SunAmerica
entered into an agreement of limited partnership on December 16, 1994. Such
agreement of limited partnership will be amended and restated in its entirety
substantially in the form filed as an exhibit to the Registration Statement of
which this Offering Circular/Prospectus forms a part.
The Partnership is managed by the General Partners and exists for the
sole purpose of issuing its partnership interests in exchange for debt
securities of SunAmerica and investing the contributions by the General
Partners and the proceeds of any sale of additional partnership interests in
such debt securities. The rights of the holders of the Preferred Securities,
including economic rights, rights to information and voting rights, are set
forth in the Limited Partnership Agreement (including the Action of the
General Partners taken in accordance with the Limited Partnership Agreement)
and the Partnership Act. The Limited Partnership Agreement does not permit
the incurrence by the Partnership of any indebtedness for borrowed money. The
Limited Partnership Agreement provides that the General Partners shall pay for
all (and the Partnership shall not be obligated to pay, directly or
indirectly, for any) costs and expenses of the Partnership, including any
income taxes, duties and other governmental charges, and all costs and
expenses with respect thereto, to which the Partnership may become subject,
except for United States withholding taxes. See "Special Considerations
Relating to the Offers" and "Description of the Preferred Securities".
The business address of the Partnership is c/o SunAmerica Inc., 1
SunAmerica Center, Los Angeles, California 90067-6022, telephone number (310)
772-6000.
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Years ended September 30,
__________________________________________________________________
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (excluding interest on fixed annuities,
guaranteed investment contracts and trust
deposits) (1) 2.4 2.7 4.0 6.1 5.8
==== ==== ==== ==== ====
Ratio of earnings to fixed
charges (including interest on fixed annuities,
guaranteed investment contracts and trust
deposits) (2) 1.1 1.1 1.2 1.4 1.5
==== ==== ==== ==== ====
Ratio of earnings to combined fixed charges and
preferred stock dividends (excluding interest on
fixed annuities, guaranteed investment contracts
and trust deposits) (3) 2.0 2.3 2.7 2.8 2.8
==== ==== ==== ==== ====
Ratio of earnings to combined fixed charges and
preferred stock dividends (including interest on
fixed annuities, guaranteed investment contracts
and trust deposits) (4) 1.1 1.1 1.2 1.3 1.4
==== ==== ==== ==== ====
_______________
(1) In computing the ratio of earnings to fixed charges (excluding interest
on fixed annuities, guaranteed investment contracts and trust
deposits), fixed charges consist of interest expense on senior and
subordinated indebtedness. Earnings are computed by adding interest
incurred on senior and subordinated indebtedness to pretax income.
(2) In computing the ratio of earnings to fixed charges (including interest
on fixed annuities, guaranteed investment contracts and trust
deposits), fixed charges consist of interest expense on senior and
subordinated indebtedness, fixed annuity contracts, guaranteed
investment contracts and trust deposits. Earnings are computed by
adding interest incurred on senior and subordinated indebtedness, fixed
annuity contracts, guaranteed investment contracts and trust deposits
to pretax income.
(3) In computing the ratio of earnings to combined fixed charges and
preferred stock dividends (excluding interest on fixed annuities,
guaranteed investment contracts and trust deposits), combined fixed
charges and preferred stock dividends consist of interest expense on
senior and subordinated indebtedness and dividends on preferred stock
on a tax equivalent basis. Earnings are computed by adding interest
incurred on senior and subordinated indebtedness to pretax income.
(4) In computing the ratio of earnings to combined fixed charges and
preferred stock dividends (including interest on fixed annuities,
guaranteed investment contracts and trust deposits), combined fixed
charges and preferred stock dividends consist of interest expense on
senior and subordinated indebtedness, fixed annuity contracts,
guaranteed investment contracts and trust deposits and dividends on
preferred stock on a tax equivalent basis. Earnings are computed by
adding interest incurred on senior and subordinated indebtedness, fixed
annuity contracts, guaranteed investment contracts and trust deposits
to pretax income.
</TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
Reference is made to SunAmerica's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994, which is incorporated by reference in
this Offering Circular/Prospectus and which contains SunAmerica's audited
consolidated financial statements, including the consolidated income statement
for SunAmerica's three fiscal years in the period ended September 30, 1994,
consolidated balance sheets as of September 30, 1993 and 1994, and the related
notes.
<TABLE>
Years ended September 30,
____________________________________________________________________________________________
1990 1991 1992 1993 1994
------------- ---------------- ---------------- -------------- ---------------
(In thousands, except as per common share amounts and ratios)
<S> <C> <C> <C> <C> <C>
Results of operations
Net investment income .. $ 132,947 $ 162,412 $ 219,384 $ 263,791 $ 294,454
Net realized investment
losses ...................... (29,319) (46,060) (56,364) (21,287) (21,124)
Fee income ................... 72,327 92,689 112,831 134,305 150,736
General and administrative
expenses..................... (112,860) (120,475) (133,058) (135,790) (132,743)
Provision for future
guaranty fund assessments . --- --- --- (22,000) ---
Amortization of deferred
acquisition costs ........... (27,872) (40,088) (48,375) (51,860) (66,925)
Other income and expenses,
net ......................... 25,644 24,903 16,673 16,852 15,603
----------------- ---------------- ---------------- ---------------- ------------
Pretax income ................ 60,867 73,381 111,091 184,011 240,001
Income tax expense ........... (22,100) (25,900) (34,300) (57,000) (74,700)
----------------- ---------------- ---------------- ---------------- ------------
Income before cumulative
effect of change in
accounting for income
taxes ...................... 38,767 47,481 76,791 127,011 165,301
Cumulative effect of change
in accounting for income
taxes ...................... --- --- --- --- (33,500)
----------------- ---------------- ---------------- ---------------- ------------
Net income ................... $ 38,767 $ 47,481 $ 76,791 $ 127,011 $ 131,801
================= ================ ================ ================ ============
Earnings per share:
Income before
cumulative effect of
change in accounting for
income taxes................ $ 1.02 $ 1.32 $ 1.80 $ 2.75 $ 3.58
Cumulative effect of
change in accounting
for income taxes.......... . --- --- --- --- (.81)
----------------- ---------------- ---------------- ---------------- ------------
Net income .................. $ 1.02 $ 1.32 $ 1.80 $ 2.75 $ 2.77
================= ================ ================ ================ ============
Cash dividends per share
paid to common
shareholders:
Nontransferable Class B
Stock ..................... $ 0.180 $ 0.180 $ 0.180 $ 0.252 $ 0.360
================= ================ ================ ================ ============
Common Stock .............. $ 0.200 $ 0.200 $ 0.200 $ 0.280 $ 0.400
================= ================ ================ ================ ============
</TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA (continued)
<TABLE>
At September 30,
--------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994
--------------- --------------- ---------------- --------------- ---------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Financial Position
Investments.................... $ 7,275,401 $ 7,596,275 $ 9,428,266 $10,364,952 $ 9,280,390
Variable annuity assets........ 2,145,196 2,746,685 3,293,343 4,194,970 4,513,093
Deferred acquisition costs..... 356,088 392,278 436,209 475,917 581,874
Other assets .................. 301,906 279,007 245,833 231,582 280,868
--------------- --------------- ---------------- --------------- ---------------
Total assets .................. $10,078,591 $11,014,245 $13,403,651 $15,267,421 $14,656,225
=============== =============== ================ =============== ===============
Reserves for fixed annuity
contracts .................... $ 5,523,320 $ 5,359,757 $ 5,143,339 $ 4,934,871 $ 4,519,623
Reserves for guaranteed
investment contracts ......... 1,294,338 1,598,963 2,023,048 2,216,104 2,783,522
Trust deposits ................ --- --- 367,458 378,986 442,320
Variable annuity
liabilities................... 2,145,196 2,746,685 3,293,343 4,194,970 4,513,093
Other payables and
accrued liabilities........... 159,416 344,789 1,372,010 1,828,153 860,763
Long-term notes and
debentures .................. --- --- 225,000 380,560 472,835
Collateralized mortgage
obligations and reverse
repurchase agreements......... 368,907 299,343 182,784 112,032 28,662
Other senior indebtedness...... 43,503 38,035 25,919 15,119 ---
Subordinated notes............. 119,485 117,985 --- --- ---
Deferred income taxes.......... 40,353 58,779 40,682 96,599 74,319
Shareholders' equity........... 384,073 449,909 730,068 1,110,027 961,088
--------------- --------------- ---------------- --------------- ---------------
Total liabilities and
shareholders' equity.......... $10,078,591 $11,014,245 $13,403,651 $15,267,421 $14,656,225
=============== =============== ================ =============== ===============
Book value per common
share.......................... $ 9.98 $ 12.24 $ 14.54 $ 22.64 $ 18.90
=============== =============== ================ =============== ===============
</TABLE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of
SunAmerica and its subsidiaries at September 30, 1994 and as adjusted to give
effect to the issuance of Junior Subordinated Debentures and Preferred
Securities in exchange for the Series B Preferred. Interest rates are as of
September 30, 1994. The "As Adjusted" capitalization described in the table
below assumes that Holders of 5,500,000 shares of Series B Preferred elect to
participate in both Offers. To the extent that any participant in the
SunAmerica Offer makes a Nonparticipation Election, minority interests in
consolidated subsidiary would be reduced and an equal amount of Junior
Subordinated Debentures would be reflected in the consolidated capitalization
of SunAmerica.
<TABLE>
<CAPTION>
September 30, 1994
-------------------------------
Actual As Adjusted
------------- --------------
(In thousands)
<S> <C> <C>
Indebtedness:
Long-term notes and debentures:
Medium-term notes due 1998 through 2005
(5-3/8% to 6-3/4%).............................................. $ 147,835 $ 147,835
8-1/8% debentures due
April 28, 2023.................................................. 100,000 100,000
9.95% debentures due
February 1, 2012................................................ 100,000 100,000
9% notes due January 15, 1999..................................... 125,000 125,000
------------- --------------
Total long-term notes and
debentures...................................................... 472,835 472,835
Collateralized mortgage obligations redeemable in 1995
(5-5/8%).......................................................... 28,662 28,662
------------- --------------
Total indebtedness................................................... 501,497 501,497
------------- --------------
Minority interests in consolidated
subsidiary (Preferred Securities of
the Partnership)................................................. --- 137,500
------------- --------------
Shareholders' equity:
Preferred Stock................................................... 374,273 236,773
Nontransferable Class B Stock..................................... 6,826 6,826
Common Stock...................................................... 28,977 28,977
Additional paid-in capital........................................ 188,667 188,667
Retained earnings................................................. 512,571 512,571
Net unrealized losses on debt and
equity securities available for sale............................ (150,226) (150,226)
------------- --------------
Total shareholders' equity ....................................... 961,088 823,588
------------- --------------
Total capitalization................................................. $1,462,585 $1,462,585
============= ==============
</TABLE>
THE OFFERS
Purpose of the Offers
The purpose of the Offers is to refinance the Series B Preferred with
the Junior Subordinated Debentures and the Preferred Securities and to achieve
certain tax efficiencies while preserving SunAmerica's flexibility with
respect to future financings. This refinancing will permit SunAmerica to
deduct interest payable on the Junior Subordinated Debentures for United
States federal income tax purposes; dividends payable on the Series B
Preferred are not deductible.
Following the Offers, and depending on the number of shares of Series
B Preferred tendered, SunAmerica may take additional actions to reduce further
or eliminate the remaining Series B Preferred, including by making purchases
of Series B Preferred in the open market, by making subsequent tender or
exchange offers or by undertaking a recapitalization transaction. Such
transactions could be undertaken on terms which are more favorable or less
favorable than the exchange ratios in the Offers. SunAmerica has made no
decision to take any such actions, and there is no assurance that SunAmerica
will take any such actions.
General
Participation in the Offers is voluntary and Holders of Series B
Preferred should carefully consider whether to accept. Neither the board of
directors of SunAmerica nor SunAmerica nor the Partnership makes any
recommendation to Holders as to whether to tender or refrain from tendering in
the Offers. Holders of Series B Preferred are urged to consult their
financial and tax advisors in making their decisions on what action to take in
light of their own particular circumstances.
Unless the context requires otherwise, the term "Holder" with respect
to the Offers means (i) any person in whose name any shares of Series B
Preferred are registered on the books of SunAmerica or (ii) any other person
who has obtained a properly completed stock power from the registered holder,
or (iii) any person whose shares of Series B Preferred are held of record by
The Depository Trust Company ("DTC") who desires to deliver such Series B
Preferred by book-entry transfer at DTC.
Terms of the Offers
Upon the terms and subject to the conditions set forth herein and in
the Letter of Transmittal and the Nonparticipation Election Letter, SunAmerica
will exchange its Junior Subordinated Debentures for up to 5,500,000
outstanding shares of Series B Preferred. The Series B Preferred has a
liquidation preference of $25 per share. The SunAmerica Offer will be
effected on a basis of $25 principal amount of Junior Subordinated Debentures
for each share of Series B Preferred validly tendered and accepted for
exchange, but a Holder of Series B Preferred will retain Junior Subordinated
Debentures only if such Holder has made a Nonparticipation Election prior to
the Partnership Expiration Date. See " -- Procedures for Tendering". Upon
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal and the Nonparticipation Election Letter, SunAmerica will accept
up to 5,500,000 shares of Series B Preferred validly tendered and not
withdrawn prior to the SunAmerica Expiration Date and, unless the SunAmerica
Offer has been withdrawn or terminated, will deliver Junior Subordinated
Debentures in exchange therefor on the Closing Date to the Partnership and to
tendering Holders of Series B Preferred who have made a Nonparticipation
Election prior to the Partnership Expiration Date. SunAmerica will not accept
Series B Preferred for exchange prior to the SunAmerica Expiration Date.
SunAmerica expressly reserves the right, in its sole discretion, to delay
acceptance for exchange of Series B Preferred tendered under the SunAmerica
Offer and the delivery of the Junior Subordinated Debentures with respect to
the Series B Preferred accepted for exchange (subject to Rules 13e-4 and 14e-1
under the Exchange Act, which require that SunAmerica consummate the
SunAmerica Offer or return the Series B Preferred deposited by or on behalf of
the Holders thereof promptly after the termination or withdrawal of the
SunAmerica Offer), or to withdraw or terminate the SunAmerica Offer at any
time prior to the SunAmerica Expiration Date for any reason.
Upon the terms and subject to the conditions set forth herein and in
the Letter of Transmittal and the Nonparticipation Election Letter, the
Partnership will issue Preferred Securities in exchange for the delivery to
the Partnership of any and all Junior Subordinated Debentures that are being
issued in exchange for Series B Preferred pursuant to the SunAmerica Offer.
Each Preferred Security has a liquidation preference of $25 per share. The
Partnership Offer will be effected on a basis of one Preferred Security for
every $25 principal amount of Junior Subordinated Debentures to be issued to
participants by SunAmerica in connection with the SunAmerica Offer.
Accordingly, Holders of Series B Preferred who participate in both Offers will
receive one Preferred Security for each outstanding share of Series B
Preferred that is validly tendered and accepted for exchange. Upon the terms
and subject to the conditions set forth herein and in the Letter of
Transmittal, the Partnership will deliver Preferred Securities to be issued
pursuant to the Partnership Offer with respect to Series B Preferred validly
tendered and not withdrawn (and as to which no Nonparticipation Election has
been made) on the Closing Date unless the Partnership Offer has been withdrawn
or terminated. The Partnership expressly reserves the right, in its sole
discretion, to delay the delivery of the Preferred Securities in exchange for
the delivery to the Partnership of Junior Subordinated Debentures to be issued
in exchange for the Series B Preferred (subject to Rules 13e-4 and 14e-1 under
the Exchange Act, which require that the Partnership consummate the
Partnership Offer or return the Junior Subordinated Debentures to be delivered
by or on behalf of the participants in the SunAmerica Offer (who do not make a
Nonparticipation Election) promptly after the termination or withdrawal of the
Partnership Offer), or to withdraw or terminate the Partnership Offer and not
issue any Preferred Securities at any time prior to the SunAmerica Expiration
Date for any reason.
In all cases, except to the extent waived by SunAmerica and the
Partnership, delivery of Junior Subordinated Debentures and Preferred
Securities issued with respect to the Series B Preferred accepted for exchange
pursuant to the Offers will be made only after timely receipt by the Exchange
Agent of Series B Preferred (or confirmation of book-entry transfer thereof),
a properly completed and duly executed Letter of Transmittal and
Nonparticipation Election Letter, if applicable, and any other documents
required thereby.
As of December 19, 1994, there were 5,620,000 shares of Series B
Preferred outstanding. This Offering Circular/Prospectus, together with the
Letter of Transmittal and the Nonparticipation Election Letter, is being sent
to all registered Holders as of .
SunAmerica shall be deemed to have accepted validly tendered Series B
Preferred (or defectively tendered Series B Preferred with respect to which
SunAmerica has waived such defect) when, as and if SunAmerica has given oral
or written notice thereof to the Exchange Agent. The Exchange Agent will act
as agent for the tendering Holders for the purpose of receiving the Junior
Subordinated Debentures from SunAmerica and the Preferred Securities from the
Partnership and remitting such Preferred Securities to tendering Holders who
are participating in both Offers and such Junior Subordinated Debentures to
the Partnership and to such tendering Holders, if any, who have made
Nonparticipation Elections. Upon the terms and subject to the conditions of
the Offers, delivery of Preferred Securities to tendering Holders and of
Junior Subordinated Debentures to the Partnership and to such tendering
Holders, if any, who have made Nonparticipation Elections, will be made on the
Closing Date.
If proration of tendered shares of Series B Preferred is required,
because of the difficulty in determining the number of shares of Series B
Preferred validly tendered (including shares tendered by the guaranteed
delivery procedures described in "-- Procedures for Tendering"), SunAmerica
does not expect that it would be able to announce the final proration factor
or to commence the exchange for any shares of Series B Preferred pursuant to
the SunAmerica Offer until approximately seven Business Days after the
SunAmerica Expiration Date. Preliminary results of the proration will be
announced by press release as promptly as practicable after the SunAmerica
Expiration Date. Holders of shares of Series B Preferred may obtain such
preliminary information from the Dealer Manager, the Information Agent or the
Exchange Agent and may also be able to obtain such information from their
brokers.
If any tendered shares of Series B Preferred are not accepted for
exchange because of an invalid tender, proration, the occurrence of certain
other events set forth herein or otherwise, unless otherwise requested by the
Holder under "Special Delivery Instructions" in the Letter of Transmittal,
such shares of Series B Preferred will be returned, without expense, to the
tendering Holder thereof (or in the case of shares of Series B Preferred
tendered by book-entry transfer into the Exchange Agent's account at DTC, such
shares of Series B Preferred will be credited to an account maintained at DTC
designated by the participant therein who so delivered such Series B
Preferred), as promptly as practicable after the SunAmerica Expiration Date or
the withdrawal or termination of the SunAmerica Offer.
Holders of Series B Preferred will not have any appraisal or
dissenters' rights under the Maryland General Corporation Law in connection
with the SunAmerica Offer. SunAmerica intends to conduct the SunAmerica Offer
in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder.
Holders who tender Series B Preferred in the SunAmerica Offer and
Holders who participate in the Partnership Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Series B Preferred
pursuant to the SunAmerica Offer or the exchange of Junior Subordinated
Debentures pursuant to the Partnership Offer. See "Fees and Expenses;
Transfer Taxes".
Expiration Dates; Extensions; Amendments; Termination
The SunAmerica Offer will expire on the SunAmerica Expiration Date.
SunAmerica reserves the right to extend the SunAmerica Offer in its sole
discretion at any time and from time to time by giving oral or written notice
to the Exchange Agent and by timely public announcement communicated, unless
otherwise required by applicable law or regulation, by making a release to the
Dow Jones News Service. During any extension of the SunAmerica Offer, all
Series B Preferred previously tendered pursuant to the SunAmerica Offer and
not withdrawn will remain subject to the SunAmerica Offer.
The Partnership Offer will expire on the Partnership Expiration Date.
The Partnership reserves the right to extend the Partnership Offer in its sole
discretion at any time and from time to time by giving oral or written notice
to the Exchange Agent and by timely public announcement communicated, unless
otherwise required by applicable law or regulation, by making a release to the
Dow Jones News Service. If the SunAmerica Offer is extended, a corresponding
extension of the Partnership Offer will be made by the Partnership. During
any extension of the Partnership Offer, all Series B Preferred previously
tendered pursuant to the SunAmerica Offer and not withdrawn by reason of the
Holder thereof making of a Nonparticipation Election with respect thereto will
remain subject to the Partnership Offer.
SunAmerica and the Partnership expressly reserve the right to (i)
extend, amend or modify the terms of the Offers in any manner and (ii)
withdraw or terminate the Offers and not accept for exchange any Series B
Preferred or Junior Subordinated Debentures, at any time prior to the
SunAmerica Expiration Date for any reason, including (without limitation) if
fewer than 2,810,000 shares of Series B are tendered in the SunAmerica Offer
or if, as of the SunAmerica Expiration Date, Holders of more than 280,000
shares of Series B Preferred tendered in the SunAmerica Offer have made a
Nonparticipation Election (which conditions may be waived by SunAmerica and
the Partnership). If SunAmerica makes a material change in the terms of the
SunAmerica Offer or if it waives a material condition of the SunAmerica Offer,
SunAmerica will extend the SunAmerica Offer. The minimum period for which the
SunAmerica Offer will be extended following a material change or waiver, other
than a change in the amount of Series B Preferred sought for exchange, will
depend upon the facts and circumstances, including the relative materiality of
the change or waiver. With respect to a change in the amount of Series B
Preferred sought, the SunAmerica Offer will be extended for a minimum of ten
Business Days following public announcement of such change. Any withdrawal or
termination of the SunAmerica Offer will be followed as promptly as
practicable by public announcement thereof. If SunAmerica withdraws or
terminates the SunAmerica Offer, it will give immediate notice to the Exchange
Agent, and all Series B Preferred theretofore tendered pursuant to the
SunAmerica Offer will be returned promptly to the tendering Holders thereof.
See "-- Withdrawal of Tenders". If the Partnership makes a material change in
the terms of the Partnership Offer or if it waives a material condition of the
Partnership Offer, the Partnership will extend the Partnership Offer. The
minimum period for which the Partnership Offer will be extended following a
material change or waiver, will depend upon the facts and circumstances,
including the relative materiality of the change or waiver. With respect to a
change in the amount of Series B Preferred sought, the Partnership Offer will
be extended for a minimum of ten Business Days following public announcement
of such change. Any withdrawal or termination of the Partnership Offer will
be followed as promptly as practicable by public announcement thereof. If the
Partnership withdraws or terminates the Partnership Offer, it will give
immediate notice to the Exchange Agent, and the Exchange Agent will return
promptly to the tendering Holders all Series B Preferred theretofore tendered
pursuant to the SunAmerica Offer, other than to Holders who have made a
Nonparticipation Election (who will receive Junior Subordinated Debentures on
the Closing Date). See "-- Withdrawal of Tenders".
Procedures for Tendering
The tender of Series B Preferred by a Holder thereof pursuant to one
of the procedures set forth below will constitute an agreement between such
Holder and SunAmerica in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal and, if
completed, the Nonparticipation Election Letter.
Each Holder of the Series B Preferred wishing to participate in both
the Offers must (i) properly complete and sign the Letter of Transmittal in
accordance with the instructions contained herein and in the Letter of
Transmittal, together with any required signature guarantees, and deliver the
same to the Exchange Agent, at one of its addresses set forth in "-- Exchange
Agent and Information Agent" prior to the SunAmerica Expiration Date and
either (a) certificates for the Series B Preferred must be received by the
Exchange Agent at such address or (b) such Series B Preferred must be
transferred pursuant to the procedures for book-entry transfer described below
and a confirmation of such book-entry transfer must be received by the
Exchange Agent, in each case prior to the SunAmerica Expiration Date or (ii)
comply with the guaranteed delivery procedures described below. Any Holder of
Series B Preferred who wishes to participate in the SunAmerica Offer but who
does not wish to participate in the Partnership Offer must comply with the
instructions outlined in the next preceding sentence and, in addition, must
make a Nonparticipation Election by properly completing and signing the
Nonparticipation Election Letter in accordance with the instructions contained
herein and in the Nonparticipation Election Letter, together with any required
signature guarantees, and deliver the same to the Exchange Agent, at one of its
addresses set forth in "-- Exchange Agent and Information Agent" prior to the
Partnership Expiration Date. Any Holder of Series B Preferred who submits a
Letter of Transmittal, tenders shares of Series B Preferred as described in
this paragraph and does not submit a Nonparticipation Election Letter prior to
the Partnership Expiration Date will thereby have directed SunAmerica to
deliver Junior Subordinated Debentures to the Partnership instead of
delivering such Junior Subordinated Debentures to such Holder, and such Holder
will be issued Preferred Securities by the Partnership on the Closing Date.
In order to participate in the Offers, Holders of Series B Preferred
must submit a Letter of Transmittal and comply with the other procedures for
tendering in accordance with the instructions contained herein and in the
Letter of Transmittal prior to the SunAmerica Expiration Date. After the
SunAmerica Expiration Date, tendering Holders of Series B Preferred may not
withdraw from the SunAmerica Offer but may withdraw from the Partnership Offer
by making a Nonparticipation Election prior to the Partnership Expiration
Date.
LETTERS OF TRANSMITTAL, NONPARTICIPATION ELECTION LETTERS, SERIES B PREFERRED
AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT,
NOT TO SUNAMERICA, THE PARTNERSHIP, THE DEALER MANAGER OR THE INFORMATION
AGENT.
Special Procedure for Beneficial Owners. Any beneficial owner whose
Series B Preferred is registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender should contact
such registered Holder promptly and instruct such registered Holder to tender
on such beneficial owner's behalf. If such beneficial owner wishes to tender
on its own behalf, such owner must, prior to completing and executing the
Letter of Transmittal and, if applicable, the Nonparticipation Election
Letter, and delivering its Series B Preferred, either make appropriate
arrangements to register ownership of the Series B Preferred in such owner's
name or obtain a properly completed stock power from the registered Holder.
The transfer of registered ownership may take considerable time and may not be
able to be completed prior to the SunAmerica Expiration Date.
THE METHOD OF DELIVERY OF SERIES B PREFERRED AND ALL OTHER DOCUMENTS
IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED
THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PRIOR INSURANCE
OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE SUNAMERICA
EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE
SUNAMERICA EXPIRATION DATE.
Signature Guarantees. If tendered Series B Preferred is registered
in the name of the signer of the Letter of Transmittal and the Junior
Subordinated Debentures to be issued in exchange therefor or the Preferred
Securities to be issued with respect thereto are to be issued (and any
untendered Series B Preferred is to be reissued) in the name of the registered
Holder (which term, for the purposes described herein, shall include any
participant in DTC whose name appears on a security listing as the owner of
Series B Preferred), the signature of such signer need not be guaranteed. If
the tendered Series B Preferred is registered in the name of someone other
than the signer of the Letter of Transmittal, such tendered Series B Preferred
must be endorsed or accompanied by written instruments of transfer in form
satisfactory to SunAmerica and duly executed by the registered Holder, and the
signature on the endorsement or instrument of transfer must be guaranteed by a
financial institution (including most banks, savings and loans associations
and brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program or the Stock Exchange Medallion Program (any of the
foregoing hereinafter referred to as an "Eligible Institution"). If the
Preferred Securities, the Junior Subordinated Debentures and/or the Series B
Preferred not exchanged are to be delivered to an address other than that of
the registered Holder appearing on the register for the Series B Preferred,
the signature in the Letter of Transmittal and, if the Holder wishes to
participate only in the SunAmerica Offer but not in the Partnership Offer, the
Nonparticipation Election Letter, must be guaranteed by an Eligible
Institution.
Book-Entry Transfer. SunAmerica understands that the Exchange Agent
will make a request promptly after the date of this Offering
Circular/Prospectus to establish accounts with respect to the Series B
Preferred at DTC for the purpose of facilitating the Offers, and subject to
the establishment thereof, any financial institution that is a participant in
DTC's system may make book-entry delivery of Series B Preferred by causing DTC
to transfer such Series B Preferred into the Exchange Agent's account with
respect to the Series B Preferred in accordance with DTC's Automated Tender
Offer Program ("ATOP") procedures for such book-entry transfers. However, the
exchange for the Series B Preferred so tendered will only be made after timely
confirmation (a "Book-Entry Confirmation") of such Book-Entry Transfer of
Series B Preferred into the Exchange Agent's account, and timely receipt by the
Exchange Agent of an Agent's Message (as such term is defined in the next
sentence) and any other documents required by the Letter of Transmittal. The
term "Agent's Message" means a message, transmitted by DTC and received by the
Exchange Agent and forming a part of a Book-Entry Confirmation, which states
that DTC has received an express acknowledgment from a participant tendering
Series B Preferred that is the subject of such Book-Entry Confirmation that
such participant has received and agrees to be bound by the terms of the
Letter of Transmittal, and that SunAmerica and/or the Partnership, as
applicable, may enforce such agreement against such participant.
Guaranteed Delivery. If a Holder desires to participate in both
Offers or only in the SunAmerica Offer and time will not permit a Letter of
Transmittal or Series B Preferred to reach the Exchange Agent before the
SunAmerica Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if the Exchange Agent
has received at its office prior to the SunAmerica Expiration Date, a letter,
telegram or facsimile transmission from an Eligible Institution setting forth
the name and address of the tendering Holder, the name(s) in which the Series
B Preferred is registered and, if the Series B Preferred is held in
certificated form, the certificate numbers of the Series B Preferred to be
tendered, and stating that the tender is being made thereby and guaranteeing
that within five NYSE trading days after the date of execution of such letter,
telegram or facsimile transmission by the Eligible Institution, the Series B
Preferred in proper form for transfer together with a properly completed and
duly executed Letter of Transmittal (and any other required documents), or a
confirmation of book-entry transfer of such Series B Preferred into the
Exchange Agent's account at DTC, will be delivered by such Eligible
Institution. Unless the Series B Preferred being tendered by the
above-described method is deposited with the Exchange Agent within the time
period set forth above (accompanied or preceded by a properly completed Letter
of Transmittal and any other required documents) or a confirmation of
book-entry transfer of such Series B Preferred into the Exchange Agent's
account at DTC in accordance with DTC's ATOP procedures is received,
SunAmerica may, at its option, reject the tender. In addition to the copy
being transmitted herewith, copies of a Notice of Guaranteed Delivery which
may be used by Eligible Institutions for the purposes described in this
paragraph are available from the Exchange Agent and the Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Series B Preferred will be determined by SunAmerica, whose determination will
be final and binding. SunAmerica reserves the absolute right to reject any or
all tenders not in proper form or the acceptance for exchange of which may, in
the opinion of SunAmerica's counsel, be unlawful. SunAmerica also reserves
the absolute right to waive any defect or irregularity in the tender of any
Series B Preferred, and SunAmerica's interpretation of the terms and conditions
of the SunAmerica Offer and the Partnership's interpretation of the terms and
conditions of the Partnership Offer (in each case, including the instructions
in the Letter of Transmittal) will be final and binding. None of SunAmerica,
the Partnership, the Exchange Agent, the Dealer Manager, the Information Agent
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any
such notification.
Tenders of Series B Preferred involving any irregularities will not
be deemed to have been made until such irregularities have been cured or
waived. Series B Preferred received by the Exchange Agent that is not validly
tendered and as to which the irregularities have not been cured or waived will
be returned by the Exchange Agent to the tendering Holder (or in the case of
Series B Preferred tendered by book-entry transfer into the Exchange Agent's
account at DTC, such Series B Preferred will be credited to an account
maintained at DTC designated by the participant therein who so delivered such
Series B Preferred), unless otherwise requested by the Holder in the Letter of
Transmittal, as promptly as practicable after the SunAmerica Expiration Date
or the withdrawal or termination of the SunAmerica Offer.
Letter of Transmittal
The Letter of Transmittal contains, among other things, the following
terms and conditions, which are part of the Offers.
The party tendering Series B Preferred for exchange (the
"Transferor") exchanges, assigns and transfers the Series B Preferred to
SunAmerica and, unless such party has made a Nonparticipation Election,
exchanges, assigns and transfers the Junior Subordinated Debentures to be
issued in exchange for Series B Preferred to the Partnership, and irrevocably
constitutes and appoints the Exchange Agent as the Transferor's agent and
attorney-in-fact to cause the Series B Preferred and (unless such party has
made a Nonparticipation Election prior to the Partnership Expiration Date) the
Junior Subordinated Debentures to be assigned, transferred and exchanged. The
Transferor represents and warrants that it has full power and authority to
tender, exchange, assign and transfer the Series B Preferred and to acquire
Junior Subordinated Debentures issuable upon the exchange of such tendered
Series B Preferred and (unless such party has made a Nonparticipation Election
prior to the Partnership Expiration Date) to acquire Preferred Securities
issuable by the Partnership, and that, when such Transferor's shares of Series
B Preferred are accepted for exchange, SunAmerica will acquire good and
unencumbered title to such shares of tendered Series B Preferred, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim. The Transferor also warrants that it will, upon request,
execute and deliver any additional documents deemed by SunAmerica to be
necessary or desirable to complete the exchange, assignment and transfer of
tendered Series B Preferred or transfer ownership of such Series B Preferred
on the account books maintained by DTC. All authority conferred by the
Transferor will survive the death, bankruptcy or incapacity of the Transferor
and every obligation of the Transferor shall be binding upon the heirs, legal
representatives, successors, assigns, executors and administrators of such
Transferor.
Withdrawal of Tenders
Tenders of Series B Preferred pursuant to the SunAmerica Offer may
be withdrawn at any time prior to the SunAmerica Expiration Date and, unless
accepted for exchange by SunAmerica, may be withdrawn at any time after 40
Business Days after the date of this Offering Circular/Prospectus.
To be effective, a written notice of withdrawal delivered by mail,
hand delivery or facsimile transmission must be timely received by the
Exchange Agent at the address set forth below under "-- Exchange Agent and
Information Agent". The method of notification is at the risk and election of
the Holder. Any such notice of withdrawal must specify (i) the Holder named
in the Letter of Transmittal as having tendered Series B Preferred to be
withdrawn, (ii) if the Series B Preferred is held in certificated form, the
certificate numbers of the Series B Preferred to be withdrawn, (iii) that such
Holder is withdrawing his election to have such Series B Preferred exchanged
and (iv) the name of the registered Holder of such Series B Preferred, and
must be signed by the Holder in the same manner as the original signature on
the Letter of Transmittal (including any required signature guarantees) or be
accompanied by evidence satisfactory to SunAmerica that the person withdrawing
the tender has succeeded to the beneficial ownership of the Series B Preferred
being withdrawn. The Exchange Agent will return the properly withdrawn Series
B Preferred promptly following receipt of notice of withdrawal. If Series B
Preferred has been tendered pursuant to the procedure for book-entry transfer,
any notice of withdrawal must specify the name and number of the account at
DTC to be credited with the withdrawn Series B Preferred and otherwise comply
with DTC's procedures. All questions as to the validity of notice of
withdrawal, including time of receipt, will be determined by SunAmerica, and
such determination will be final and binding on all parties. Withdrawals of
tenders of Series B Preferred may not be rescinded and any Series B Preferred
withdrawn will thereafter be deemed not validly tendered for purposes of the
SunAmerica Offer. Properly withdrawn Series B Preferred, however, may be
retendered by following the procedures therefor described elsewhere herein at
any time prior to the SunAmerica Expiration Date. See "-- Procedures for
Tendering."
Elections to participate in the Partnership Offer may be withdrawn
at any time prior to the Partnership Expiration Date by making a
Nonparticipation Election in accordance with "Procedures for Tendering"
described above and, unless Preferred Securities have been issued by the
Partnership, may be made at any time after 40 Business Days after the date of
this Offering Circular/Prospectus. See "-- Procedures for Tendering".
Nonparticipation Elections may be withdrawn at any time prior to the
Partnership Expiration Date by delivering a written notice of withdrawal. To
be effective, such written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange
Agent at the address set forth below under "-- Exchange Agent and Information
Agent". The method of notification is at the risk and election of the Holder.
Any such notice of withdrawal must (i) contain the name of the Holder and a
statement that such Holder is withdrawing the Nonparticipation Election
previously made by such Holder, (ii) if the Series B Preferred is held in
certificated form, specify certificate numbers as to which a Nonparticipation
Election is being withdrawn and (iii) be signed in the same manner as the
Nonparticipation Election Letter previously delivered by such Holder.
Acceptance of Shares and Proration
Upon the terms and subject to the conditions of the SunAmerica Offer,
if 5,500,000 or fewer shares of Series B Preferred have been validly tendered
and not withdrawn prior to the SunAmerica Expiration Date, SunAmerica will
accept for exchange all such shares of Series B Preferred. Upon the terms and
subject to the conditions of the SunAmerica Offer, if more than 5,500,000
shares of Series B Preferred (or, if decreased as described herein, such
lesser number as SunAmerica may elect to purchase pursuant to the SunAmerica
Offer) have been validly tendered and not withdrawn prior to the SunAmerica
Expiration Date, SunAmerica will accept for exchange shares of Series B
Preferred from each tendering Holder on a pro rata basis, subject to
adjustment to avoid the acceptance for exchange of fractional shares.
If SunAmerica decreases the amount of Series B Preferred sought, and
the SunAmerica Offer is scheduled to expire less than ten Business Days from
and including the date that notice of such decrease is first published, sent
or given in the manner specified in "-- Expiration Dates; Extensions;
Amendments; Termination", then the SunAmerica Offer will be extended for ten
Business Days from and including the date of such notice.
All shares of Series B Preferred not accepted pursuant to the
SunAmerica Offer, including shares not purchased because of proration, will be
returned to the tendering Holders at SunAmerica's expense as promptly as
practicable following the SunAmerica Expiration Date.
Upon the terms and subject to the conditions of the Partnership
Offer, the Partnership will issue Preferred Securities in exchange for the
delivery to the Partnership of any and all Junior Subordinated Debentures that
are being issued in exchange for Series B Preferred pursuant to the SunAmerica
Offer.
The Partnership Offer is not subject to proration.
Exchange Agent and Information Agent
The First National Bank of Chicago has been appointed as Exchange
Agent for the Offers.
The Exchange Agent:
The First National Bank of Chicago
<TABLE>
<S> <C>
By Hand or Overnight Courier in By Hand or Overnight Courier in
Chicago: New York:
The First National Bank of Chicago, First Chicago Trust Company of
Exchange Agent New York
One North State Street 14 Wall Street
9th Floor 8th Floor
Attention: Securities Processing New York, New York 10005
Suite 0124
Chicago, Illinois 60602
</TABLE>
By Mail:
The First National Bank of Chicago,
Exchange Agent
Registered Securities Processing Unit
One First National Plaza
Suite 0124
Chicago, Illinois 60670-0124
By Facsimile Transmission
(For Eligible Institutions Only):
(312) 407-1067 or (212) 240-8938
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(800) 524-9472 (Chicago) or (212) 240-8800 (New York)
has been retained by SunAmerica as the Information Agent
to assist in connection with the Offers. Questions and requests for
assistance regarding the Offers, requests for additional copies of this
Offering Circular/Prospectus or of the Letter of Transmittal and requests for
Notice of Guaranteed Delivery may be directed to the Information Agent at
, telephone .
SunAmerica will pay the Exchange Agent and Information Agent
reasonable and customary fees for their services and will reimburse them for
all their reasonable out-of-pocket expenses in connection therewith.
Dealer Manager
Merrill Lynch & Co., as Dealer Manager, has agreed to solicit
exchanges of Series B Preferred for Junior Subordinated Debentures and
exchanges of Junior Subordinated Debentures for Preferred Securities.
SunAmerica will pay the Dealer Manager a fee that is dependent on the number
of shares of Series B Preferred accepted pursuant to the SunAmerica Offer and
an additional fee based on the number of Junior Subordinated Debentures
delivered pursuant to the Partnership Offer. The maximum fee payable is
approximately $ . SunAmerica will also reimburse the Dealer Manager for
certain reasonable out-of-pocket expenses in connection with the Offers and
will indemnify the Dealer Managers against certain liabilities, including
liabilities under the Securities Act. Additional solicitation may be made by
telephone or in person by officers and regular employees of SunAmerica and its
affiliates. No additional compensation will be paid to any such officers and
employees who engage in soliciting tenders. Merrill Lynch & Co. engages in
transactions with, and from time to time has performed services for,
SunAmerica, including acting as lead underwriter for the issuance of the
Series B Preferred.
LISTING AND TRADING OF PREFERRED SECURITIES, JUNIOR SUBORDINATED
DEBENTURES AND SERIES B PREFERRED
The Preferred Securities constitute a new issue of securities with
no established trading market. While the Partnership intends to list the
Preferred Securities on the NYSE, there can be no assurance that an active
market for the Preferred Securities will develop or be sustained in the future
on such exchange. Although the Dealer Manager has indicated to SunAmerica and
the Partnership that it intends to make a market in the Preferred Securities
as permitted by applicable laws and regulations prior to the commencement of
trading on the NYSE, it is not obligated to do so and may discontinue any such
market-making at any time without notice. Accordingly, no assurance can be
given as to the liquidity of, or trading markets for, the Preferred Securities.
The Junior Subordinated Debentures also constitute a new issue of
securities with no established trading market. SunAmerica does not intend to
list the Junior Subordinated Debentures on any exchange and, accordingly, no
assurance can be given as to the liquidity of, or trading markets for, the
Junior Subordinated Debentures. In addition, the Dealer Manager has advised
SunAmerica and the Partnership that, although it intends to make a market in
the Preferred Securities, it does not intend to make a market in the Junior
Subordinated Debentures, and SunAmerica and the Partnership are not aware of
any other person who expects to make such a market. It is possible that only
a small number of Junior Subordinated Debentures will be held by persons other
than the Partnership and therefore, such securities may be highly illiquid. If
the Junior Subordinated Debentures are distributed to the holders of Preferred
Securities upon the dissolution of the Partnership, SunAmerica will use its
best efforts to list the Junior Subordinated Debentures on the NYSE or on such
other exchange on which the Preferred Securities are then listed. Holders of
Series B Preferred who do not tender their Series B Preferred in the
SunAmerica Offer or whose Series B Preferred is not accepted for exchange will
continue to hold such Series B Preferred and will be entitled to all the
rights and preferences, and will be subject to all of the limitations
applicable thereto. To the extent that Series B Preferred is tendered and
accepted in the SunAmerica Offer, the terms on which untendered Series B
Preferred could subsequently be sold could be adversely affected.
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OFFERS
Except as described herein, there are no contracts, arrangements,
understandings or relationships in connection with the Offers between
SunAmerica or any of its directors or executive officers and any person with
respect to any securities of SunAmerica or the Partnership, including the
Junior Subordinated Debentures, the Series B Preferred and the Preferred
Securities.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Series B Preferred will be
borne by SunAmerica. For compensation to be paid to the Dealer Manager see
"The Offers -- Dealer Manager". The total cash expenditures to be incurred by
SunAmerica in connection with the Offers, other than fees payable to the
Dealer Manager, but including the expenses of the Dealer Manager, printing,
accounting and legal fees, and the fees and expenses of the Exchange Agent,
the Information Agent and the Trustee under the Indenture, are estimated to be
approximately $ .
SunAmerica will pay all transfer taxes, if any, applicable to the
exchange of Series B Preferred pursuant to the SunAmerica Offer. The
Partnership will pay all transfer taxes, if any, applicable to the exchange of
Junior Subordinated Debentures pursuant to the Partnership Offer. If,
however, certificates representing Preferred Securities or Junior Subordinated
Debentures, or shares of Series B Preferred not tendered or accepted for
exchange, are to be delivered to, or are to be issued in the name of, any
person other than the registered Holder of the Series B Preferred tendered or
if a transfer tax is imposed for any reason other than the exchange of Series
B Preferred or of Junior Subordinated Debentures pursuant to the Offers, then
the amount of any such transfer taxes (whether imposed on the registered
Holder or any other persons) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering Holder.
DESCRIPTION OF THE PREFERRED SECURITIES
General
All of the general partnership interests in the Partnership are
indirectly owned by SunAmerica through the General Partners, its directly or
indirectly wholly-owned subsidiaries. The Limited Partnership Agreement
(including the Action) authorizes and creates the Preferred Securities, which
represent limited partnership interests in the Partnership. Other preferred
securities may be issued from time to time by the Partnership in one or more
series as described herein (collectively, "SunAmerica Capital Preferred
Securities"). The limited partnership interests represented by the Preferred
Securities will have a preference to the General Partners' interests in the
Partnership with respect to dividends and amounts payable on redemption or
liquidation. The Limited Partnership Agreement does not permit the issuance
of any SunAmerica Capital Preferred Securities ranking, as to participation in
profits and dividends and in the assets of the Partnership, senior or junior
to the Preferred Securities or the incurrence of any indebtedness for borrowed
money by the Partnership. The summary of certain material terms and
provisions of the Preferred Securities set forth below does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
Limited Partnership Agreement (including the Action), which has been filed as
an exhibit to the Registration Statement of which this Offering
Circular/Prospectus forms a part, and the Partnership Act.
Dividends
The dividends payable on each Preferred Security will be fixed at a
rate per annum of % of the stated liquidation preference of $25 per
Preferred Security. Dividends in arrears for more than one month will bear
interest thereon at the rate per annum of % of the stated liquidation
preference of $25 per Preferred Security, compounded monthly. The term
"dividends" as used herein includes any such interest payable unless otherwise
stated. The amount of dividends payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months.
Dividends on the Preferred Securities will be cumulative, will accrue
from the Accrual Date and will be payable monthly in arrears, on the last day
of each month of each year, commencing on the last day of the month in which
the Partnership Expiration Date occurs, when, as and if declared by the
General Partners, except as otherwise described below. In addition, holders
of Preferred Securities will be entitled to cash distributions at the rate of
9 1/4% per annum of the liquidation preference thereof from December 15, 1994
through the SunAmerica Expiration Date in lieu of dividends accumulating after
December 15, 1994 on their Series B Preferred accepted for exchange, payable
at the time of the first payment of dividends on the Preferred Securities.
SunAmerica has the right under the Indenture to extend the interest
payment period from time to time on the Junior Subordinated Debentures for a
period not exceeding 60 consecutive months and, as a consequence, monthly
dividends on the Preferred Securities would likely not be paid (but would
continue to accrue with interest thereon at the rate of % per annum,
compounded monthly) by the Partnership during any such Extension Period. If
SunAmerica exercises the right to extend an interest payment period,
SunAmerica may not declare or pay dividends on, or purchase, acquire or make a
distribution or liquidation payment with respect to, any of its common stock
or preferred stock during such Extension Period; provided that SunAmerica will
be permitted to pay accrued dividends (or cash in lieu of fractional shares)
upon the conversion of any of its Series D Preferred Stock in accordance with
the terms of such stock. Prior to the termination of any such Extension
Period, SunAmerica may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 60 consecutive months. Upon the termination of any
Extension Period and the payment of all amounts then due, SunAmerica may
commence a new Extension Period, subject to the above requirements.
SunAmerica may also prepay at any time all or any portion of the interest
accrued during an Extension Period. Consequently, there could be multiple
Extension Periods of varying lengths (up to six Extension Periods of 60
consecutive months each or more numerous shorter Extension Periods) throughout
the term of the Junior Subordinated Debentures. See "Special Considerations
Relating to the Offers"; "Description of the Junior Subordinated Debentures --
Interest" and "-- Option to Extend Interest Payment Period".
It is anticipated that the Partnership's earnings available for
distribution to the holders of the Preferred Securities will be limited to
payments under the Junior Subordinated Debentures that are delivered to the
Partnership in the Partnership Offer and that are purchased with the proceeds
of the General Partners' Payments. See "Description of the Junior
Subordinated Debentures". If SunAmerica does not make interest payments on
the Junior Subordinated Debentures, there is a substantial likelihood that the
Partnership will not declare or pay dividends on the Preferred Securities.
Under the Limited Partnership Agreement, if and to the extent SunAmerica does
make interest payments on the Junior Subordinated Debentures held by the
Partnership, the Partnership is obligated, to the extent funds are legally
available therefor, to declare dividends on the Preferred Securities. The
payment of dividends (if and to the extent declared) is guaranteed by
SunAmerica as and to the extent set forth under "Description of the
Guarantee". The Guarantee is a full and unconditional guarantee from the time
of issuance of the Preferred Securities but does not apply to any payment of
dividends unless and until such dividends are declared.
Dividends on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Partnership on the
relevant record dates, which, as long as the Preferred Securities remain in
book-entry-only form, will be one Business Day prior to the relevant payment
dates. Subject to any applicable laws and regulations and the provisions of
the Limited Partnership Agreement, each such payment will be made as described
under "Book-Entry-Only Issuance - The Depository Trust Company" below. If the
Preferred Securities shall not continue to remain in book-entry-only form, the
General Partners shall have the right to select relevant record dates, which
shall be more than one Business Day prior to the relevant payment dates. If
any date on which dividends are payable on the Preferred Securities is not a
Business Day, then payment of the dividend payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
Certain Restrictions on the Partnership
If dividends have not been paid in full on the Preferred Securities,
the Partnership shall not:
(i) declare, pay or set aside for payment any dividends on the
general partnership interests;
(ii) declare, pay, or set aside for payment any dividends on
any other series of SunAmerica Capital Preferred Securities, unless
the amounts of any dividends declared and paid or set aside on any
other series of SunAmerica Capital Preferred Securities and on the
Preferred Securities are on a pro rata basis on the dates such
dividends are paid on such other series of SunAmerica Capital
Preferred Securities, so that
(x) the aggregate amount of dividends declared, paid or
set aside on the Preferred Securities bears to the aggregate amount
of dividends declared, paid or set aside on such other series of
SunAmerica Capital Preferred Securities the same ratio as
(y) the aggregate of all accrued and unpaid dividends
in respect of the Preferred Securities bears to the aggregate of all
accrued and unpaid dividends in respect of such other series of
SunAmerica Capital Preferred Securities; or
(iii) redeem, purchase or otherwise acquire any other SunAmerica
Capital Preferred Securities;
until, in each case, such time as all accrued and unpaid dividends on the
Preferred Securities shall have been paid in full for all dividend periods
terminating on or prior to, in the case of clauses (i) and (ii), such payment
and, in the case of clause (iii), the date of such redemption, purchase or
acquisition.
As of the date of this Offering Circular/Prospectus, there are no
series of SunAmerica Capital Preferred Securities outstanding.
Optional Redemption
The Preferred Securities are redeemable, at the option of the
Partnership, in whole or in part, from time to time, on or after June 15,
1997, upon not less than 30 nor more than 60 days' notice, at the Redemption
Price, payable in cash. If fewer than all the outstanding Preferred
Securities are to be so redeemed, the Preferred Securities to be redeemed will
be selected as described under "Book-Entry-Only Issuance - The Depository
Trust Company" below. If a partial redemption would result in the delisting
of the Preferred Securities, the Partnership may only redeem the Preferred
Securities in whole.
Special Event Redemption or Distribution
Subject to the following sentence, if a Tax Event or an Investment
Company Event (each as hereinafter defined, and each a "Special Event") shall
occur and be continuing, the General Partners shall elect either to (i) redeem
the Preferred Securities in whole (and not in part), upon not less than 30 or
more than 60 days' notice at the Redemption Price, within 90 days following
the occurrence of such Special Event; provided that, if and as long as at the
time there is available to the General Partners the opportunity to eliminate,
within such 90-day period, the Special Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some other
similar reasonable such measure that has no adverse effect on the Partnership
or SunAmerica, the General Partners will pursue such measure in lieu of
redemption, or (ii) dissolve the Partnership and, in the manner described in
"Liquidation Distribution Upon Dissolution", cause Junior Subordinated
Debentures held by the Partnership having an aggregate principal amount equal
to the aggregate stated liquidation preference of, with an interest rate
identical to the dividend rate of, and accrued and unpaid interest equal to
accrued and unpaid dividends (whether or not declared) on, the Preferred
Securities to be distributed to the holders of the Preferred Securities in
liquidation of the Partnership, within 90 days following the occurrence of
such Special Event. In the case of a Tax Event, the General Partners may, as
an alternative to electing to redeem the Preferred Securities or dissolving
the Partnership, elect to cause the Preferred Securities to remain
outstanding.
"Tax Event" means that SunAmerica shall have obtained an opinion of
nationally recognized independent tax counsel experienced in such matters to
the effect that on or after the date of this Offering Circular/Prospectus, as
a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein,
(b) any amendment to, or change in, an interpretation or application of any
such laws or regulations by any legislative body, court, governmental agency or
regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
effective or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after the date of this Offering
Circular/Prospectus, there is more than an insubstantial risk that (i) the
Partnership is, or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to interest accrued or received
on the Junior Subordinated Debentures held by it, (ii) the Partnership is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of taxes, duties or other governmental charges or (iii) interest
payable by SunAmerica to the Partnership on the Junior Subordinated Debentures
held by it is not, or within 90 days of the date thereof will not be,
deductible by SunAmerica for United States federal income tax purposes.
"Investment Company Event" means the occurrence of a change in law
or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law") to the effect that the Partnership is
or will be considered an "investment company" which is required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), which Change in 1940 Act Law becomes effective on or after the date of
this Offering Circular/Prospectus; provided that no Investment Company Event
shall be deemed to have occurred if the General Partners obtain a written
opinion of nationally recognized independent counsel to the Partnership
experienced in practice under the 1940 Act to the effect that SunAmerica has
successfully issued an additional or supplemental irrevocable and
unconditional guarantee or SunAmerica or the General Partners have taken such
other actions as may be necessary so that, in the opinion of such counsel,
notwithstanding such Change in 1940 Act Law, the Partnership is not required
to be registered as an "investment company" within the meaning of the 1940
Act. In case of any uncertainty regarding an Investment Company Event, the
good faith determination of the General Partners (based on the advice of
counsel) shall be conclusive.
After the date fixed for any distribution of Junior Subordinated
Debentures held by the Partnership, upon dissolution of the Partnership, (i)
the Preferred Securities will no longer be deemed to be outstanding, (ii) DTC
or its nominee, as the record holder of the Preferred Securities, will receive
a registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution and (iii) any
certificates representing Preferred Securities not held by DTC or its nominee
will be deemed to represent beneficial interests in the Junior Subordinated
Debentures held by the General Partners as nominees for such record holders
having a principal amount equal to the stated liquidation preference of such
Preferred Securities.
There can be no assurance as to the market price for the Junior
Subordinated Debentures which may be distributed in exchange for Preferred
Securities if a dissolution and liquidation of the Partnership were to occur.
Accordingly, the Junior Subordinated Debentures which the investor may
subsequently receive may trade at a discount to the price of the Preferred
Securities exchanged. If the Junior Subordinated Debentures are distributed
to the holders of Preferred Securities upon the dissolution of the
Partnership, SunAmerica will use its best efforts to list the Junior
Subordinated Debentures on the NYSE or on such other exchange on which the
Preferred Securities are then listed.
Mandatory Redemption
Upon the repayment of the Junior Subordinated Debentures held by the
Partnership, whether at maturity or upon redemption, repurchase or otherwise,
the proceeds from such repayment will be applied first to redeem the Preferred
Securities, in whole, upon not less than 30 nor more than 60 days' notice, at
the Redemption Price. Notwithstanding the foregoing, the Preferred Securities
will not be redeemed if (i) in lieu of repaying the Junior Subordinated
Debentures held by the Partnership when due or optionally redeeming such
Junior Subordinated Debentures, SunAmerica is permitted by the Partnership to
exchange such Junior Subordinated Debentures for new junior subordinated
debentures with an extended maturity date or (ii) SunAmerica repays such Junior
Subordinated Debentures held by the Partnership when due or optionally redeems
such Junior Subordinated Debentures but is permitted by the Partnership to
reborrow the proceeds from such repayment or redemption which reborrowing will
be evidenced by new junior subordinated debentures and the following
conditions are satisfied (which satisfaction, in the case of clauses (f)
through (j), shall be determined in the judgment of the General Partners and
the Partnership's financial advisor (selected by the General Partners and who
shall be unaffiliated with SunAmerica and shall be among the 30 largest
investment banking firms, measured by total capital, in the United States at
the time of the issuance of the new junior subordinated debentures that will
evidence the new loan to be made in connection with such exchange or
reborrowing)): (a) SunAmerica is not bankrupt, insolvent or in liquidation,
(b) SunAmerica is not in default in the payment of any interest or principal
under the Indenture, (c) SunAmerica has made timely payments on the Junior
Subordinated Debentures being exchanged, repaid or redeemed for the
immediately preceding 24 months (and has not elected to extend any interest
payment period for the Junior Subordinated Debentures during such 24 month
period), (d) such new loan will mature no later than the earlier of (1) the
49th anniversary of the date of the initial issuance of the Junior
Subordinated Debentures and (2) the 30th anniversary of the date such new loan
is made, (e) the Partnership is not in arrears on payments of dividends on the
Preferred Securities, (f) SunAmerica is expected to be able to make timely
payment of principal of and interest on such new loan, (g) such new loan is
being made on terms, and under circumstances, that are consistent with those
which a lender would then require for a loan to an unrelated party, (h) such
new loan is being made at a rate sufficient to provide payments equal to or
greater than the amount of dividend payments required under the Preferred
Securities, (i) such new loan is being made for a term that is consistent with
market circumstances and SunAmerica's financial condition and (j) immediately
prior to the making of such new loans, the senior unsecured long-term debt of
SunAmerica is (or if no such debt is outstanding, would be) rated not less
than BBB (or the equivalent) by Standard & Poor's Corporation and Baa2 (or the
equivalent) by Moody's Investors Service, Inc. and the subordinated unsecured
long-term debt of SunAmerica (or, if more than one issue of such subordinated
debt is outstanding, the most junior of such issues) is (or if no such debt is
outstanding, would be) rated not less than BBB- (or the equivalent) by
Standard & Poor's Corporation and Baa3 by Moody's Investors Service, Inc. (or
if either of such rating organizations is not then rating SunAmerica's senior
or subordinated unsecured long-term debt, as the case may be, the equivalent
of such ratings by any other "nationally recognized statistical rating
organization", as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act).
Redemption Procedures
The Partnership may not redeem fewer than all the outstanding
Preferred Securities unless all accrued and unpaid dividends have been paid on
all Preferred Securities for all monthly dividend periods terminating on or
prior to the date of redemption.
If the Partnership gives a notice of redemption in respect of
Preferred Securities (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Partnership will deposit
irrevocably with DTC funds sufficient to pay the applicable Redemption Price
and will give DTC irrevocable instructions and authority to pay the Redemption
Price to the holders of the Preferred Securities. See "-- Book-Entry-Only
Issuance - The Depository Trust Company". If notice of redemption shall have
been given and funds deposited as required, then upon the date of such
deposit, all rights of holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price, but without interest on such
Redemption Price. If any date fixed for redemption of Preferred Securities is
not a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay) except that, if
such Business Day falls in the next calendar year, such payment will be made
on the immediately preceding Business Day, in each case with the same force
and effect as if made on such date fixed for redemption. If payment of the
Redemption Price in respect of Preferred Securities is improperly withheld or
refused and not paid either by the Partnership or by SunAmerica pursuant to
the Guarantee described under "Description of the Guarantee", dividends on
such Preferred Securities will continue to accrue, from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating
the Redemption Price.
Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), SunAmerica or any of its
subsidiaries, including the Partnership, may at any time and from time to time
purchase outstanding Preferred Securities by tender, in the open market or by
private agreement. If the Partnership purchases and cancels any Preferred
Securities, Junior Subordinated Debentures held by the Partnership will be
repaid in a principal amount equal to the aggregate stated liquidation
preference of the Preferred Securities so purchased, together with any accrued
and unpaid interest on such principal amount of Junior Subordinated
Debentures. See "Description of the Junior Subordinated Debentures --
Optional Redemption".
Liquidation Distribution Upon Dissolution
In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Partnership, the holders of the Preferred Securities at
the time will be entitled to receive out of the assets of the Partnership
available for distribution to partners after satisfaction of liabilities of
creditors as required by the Partnership Act, before any distribution of
assets is made to the General Partners, but together with the holders of every
other series of SunAmerica Capital Preferred Securities outstanding, an amount
equal to, in the case of holders of Preferred Securities, the aggregate of the
stated liquidation preference of $25 per Preferred Security plus accrued and
unpaid dividends thereon to the date of payment (such amount being the
"Liquidation Distribution"), unless, in connection with such dissolution,
winding-up or termination, Junior Subordinated Debentures in an aggregate
principal amount equal to the aggregate stated liquidation preference of such
Preferred Securities, with an interest rate identical to the dividend rate of,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid dividends (whether or not declared) on, such Preferred Securities,
shall be distributed on a pro rata basis to the holders of the Preferred
Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Partnership has insufficient assets available to
pay in full the aggregate Liquidation Distribution and the aggregate maximum
liquidation distributions on any other series of SunAmerica Capital Preferred
Securities, then the amounts payable directly by the Partnership on the
Preferred Securities and on such other series of SunAmerica Capital Preferred
Securities shall be paid in cash or in kind on a pro rata basis, so that
(x) the aggregate amount paid in respect of the Liquidation
Distribution bears to the aggregate amount paid as liquidation
distributions on the other series of SunAmerica Capital Preferred
Securities the same ratio as
(y) the aggregate Liquidation Distribution bears to the
aggregate maximum liquidation distributions on the other series of
SunAmerica Capital Preferred Securities;
provided that if such a distribution is being made in kind and includes Junior
Subordinated Debentures and other series of similar debentures, to the extent
practicable, the Partnership will distribute to the holders of each series of
SunAmerica Capital Preferred Securities debentures that relate to such series.
Pursuant to the Limited Partnership Agreement, the Partnership shall
be dissolved and its affairs shall be wound up: (i) on December 31, 2094, the
expiration of the term of the Partnership, (ii) upon the bankruptcy of either
General Partner, (iii) upon the filing of a certificate of dissolution or its
equivalent with respect to either General Partner, or the revocation of either
General Partner's charter and the expiration of 90 days after the date of
notice to such General Partner of revocation without a reinstatement of its
charter, or if any other event occurs that causes either General Partner to
cease to be a general partner of the Partnership under the Partnership Act,
unless the business of the Partnership is continued by any remaining General
Partner in accordance with the Partnership Act, (iv) in accordance with the
provisions of the Preferred Securities, (v) upon the entry of a decree of
judicial dissolution or (vi) upon the written consent of all partners of the
Partnership.
Merger, Consolidation or Amalgamation of the Partnership
The Partnership may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below. The Partnership may, without the consent of the holders of
the Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by a limited partnership, limited liability company or trust
organized as such under the laws of any state of the United States of America
provided that (i) such successor entity either (x) expressly assumes all of
the obligations of the Partnership under the Preferred Securities or (y)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Preferred Securities (the "Successor Securities") so
long as the Successor Securities are not junior to any other equity securities
of the successor entity, with respect to participation in the profits and
dividends, and in the assets, of the successor entity, (ii) SunAmerica
expressly acknowledges such successor entity as the holder of the Junior
Subordinated Debentures held by the Partnership immediately prior to such
merger, consolidation, amalgamation or replacement, (iii) the Preferred
Securities or any Successor Securities are listed, or any Successor Securities
will be listed upon notification of issuance, on any national securities
exchange or other organization on which the Preferred Securities are then
listed, (iv) such merger, consolidation, amalgamation or replacement does not
cause the Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the powers, preferences and other special rights of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in
the new entity), (vi) such successor entity has a purpose substantially
identical to that of the Partnership, (vii) prior to such merger,
consolidation, amalgamation or replacement, SunAmerica has received an opinion
of nationally recognized independent counsel to the Partnership experienced in
such matters to the effect that (x) such successor entity will be treated as a
partnership for United States federal income tax purposes, (y) following such
merger, consolidation, amalgamation or replacement, SunAmerica and such
successor entity will be in compliance with the 1940 Act without registering
thereunder as an investment company and (z) such merger, consolidation,
amalgamation or replacement will not adversely affect the limited liability of
the holders of the Preferred Securities and (viii) SunAmerica guarantees the
obligations of such successor entity under the Successor Securities at least
to the extent provided by the Guarantee.
Voting Rights
Except as provided below and under "Description of the Guarantee --
Amendments and Assignment" and as otherwise required by law and the Limited
Partnership Agreement, the holders of the Preferred Securities will have no
voting rights.
If (i) arrearages of dividends on the Preferred Securities shall
exist for 18 consecutive monthly dividend periods; (ii) an Event of Default
(as defined in the Indenture) occurs and is continuing on the Junior
Subordinated Debentures; or (iii) SunAmerica is in default on any of its
payment obligations under the Guarantee (as described under "Description of
the Guarantee -- Certain Covenants of SunAmerica"), then the holders of the
Preferred Securities, together with the holders of any other series of
SunAmerica Capital Preferred Securities having the right to vote for the
appointment of a special representative of the Partnership and the limited
partners (a "Special Representative") in such event, acting as a single class,
will be entitled by the vote of a majority in aggregate liquidation preference
of such holders to appoint and authorize a Special Representative to enforce
the Partnership's creditor rights under the Junior Subordinated Debentures, to
enforce the rights of the holders of the Preferred Securities under the
Guarantee and to enforce the rights of the holders of the Preferred Securities
to receive dividends (if and to the extent declared) on the Preferred
Securities. In the case of clause (i) above, if the Partnership's failure to
pay dividends is a consequence of SunAmerica's exercise of its right to extend
the interest payment period for the Junior Subordinated Debentures as
described under "Description of the Junior Subordinated Debentures -- Option
to Extend Interest Payment Period", the Special Representative will have no
right to enforce the payment of dividends until an Event of Default shall have
occurred. The Special Representative shall not, by virtue of acting in such
capacity, be admitted as a general partner in the Partnership or otherwise be
deemed to be a general partner in the Partnership and shall have no liability
for the debts, obligations or liabilities of the Partnership. Not later than
30 days after such right to appoint a Special Representative arises, the
General Partners will convene a meeting for the purpose of appointing a
Special Representative. If the General Partners fail to convene such meeting
within such 30-day period, the holders of 10% in liquidation preference of the
outstanding SunAmerica Capital Preferred Securities will be entitled to
convene such meeting. The provisions of the Limited Partnership Agreement
relating to the convening and conduct of the meetings of the partners will
apply with respect to any such meeting. If, at any such meeting, holders of
less than a majority in aggregate liquidation preference of SunAmerica Capital
Preferred Securities entitled to vote for the appointment of a Special
Representative vote for such appointment, no Special Representative shall be
appointed. Any Special Representative appointed shall cease to be a Special
Representative of the Partnership and the limited partners if the Partnership
(or SunAmerica pursuant to the Guarantee) shall have paid in full all accrued
and unpaid dividends on the SunAmerica Capital Preferred Securities or such
default or breach under (ii) or (iii) above, as the case may be, shall have
been cured, and the General Partners shall continue the business of the
Partnership without dissolution. Notwithstanding the appointment of any such
Special Representative, the General Partners shall continue as General Partners
and SunAmerica shall retain all rights under the Indenture, including the
right to extend the interest payment period, and any extension for a period
not exceeding 60 months of SunAmerica's interest payment period will not
constitute a default under the Indenture or enable a holder of Preferred
Securities to require the payment of a dividend that has not theretofore been
declared.
If any proposed amendment to the Limited Partnership Agreement
provides for, or the General Partners otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or special rights
of the Preferred Securities, whether by way of amendment to the Limited
Partnership Agreement or otherwise (including, without limitation, the
authorization or issuance of any limited partnership interests in the
Partnership ranking, as to participation in the profits or dividends or in the
assets of the Partnership, senior to the Preferred Securities), or (ii) the
dissolution, winding-up or termination of the Partnership, other than (x) in
connection with the distribution of Junior Subordinated Debentures held by the
Partnership upon the occurrence of a Special Event or (y) as described under
"Merger, Consolidation or Amalgamation of the Partnership" above, then the
holders of outstanding Preferred Securities will be entitled to vote on such
amendment or proposal of the General Partners (but not on any other amendment
or proposal) as a class with all other holders of series of SunAmerica Capital
Preferred Securities similarly affected, and such amendment or proposal shall
not be effective except with the approval of the holders of 66 2/3% in
liquidation preference of such outstanding SunAmerica Capital Preferred
Securities having a right to vote on the matter; provided, however, that no
such approval shall be required if the dissolution, winding-up or termination
of the Partnership is proposed or initiated upon the initiation of
proceedings, or after proceedings have been initiated, for the dissolution,
winding-up, liquidation or termination of SunAmerica.
The rights attached to the Preferred Securities will be deemed not
to be adversely affected by the creation or issue of, and no vote will be
required for the creation or issue of, any further limited partnership
interests of the Partnership ranking pari passu with the Preferred Securities
with regard to participation in the profits or dividends or in the assets of
the Partnership. Holders of Preferred Securities have no preemptive rights.
So long as any Junior Subordinated Debentures are held by the
Partnership, the General Partners shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
executing any trust or power conferred on the Trustee with respect to the
Junior Subordinated Debentures, (ii) waive any past default that is waivable
under Section 6.06 of the Indenture, (iii) exercise any right to rescind or
annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Junior Subordinated
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of at least 66 2/3% in liquidation
preference of all series of SunAmerica Capital Preferred Securities who would
be affected thereby if their SunAmerica Capital Preferred Securities were to be
exchanged for Junior Subordinated Debentures or debentures of other series
issued under the Indenture, acting as a single class; provided, however, that
where a consent under the Indenture would require the consent of each holder
of Junior Subordinated Debentures or debentures of other series issued under
the Indenture affected thereby, no such consent shall be given by the General
Partners without the prior consent of each holder of all series of SunAmerica
Capital Preferred Securities who would be so affected thereby. The General
Partners shall not revoke any action previously authorized or approved by a
vote of any series of SunAmerica Capital Preferred Securities. The General
Partners shall notify all holders of the Preferred Securities of any notice of
default received from the Trustee with respect to the Junior Subordinated
Debentures.
Any required approval of holders of Preferred Securities may be given
at a separate meeting of holders of Preferred Securities convened for such
purpose, at a meeting of all of the partners in the Partnership or pursuant to
written consent. The Partnership will cause a notice of any meeting at which
holders of Preferred Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be mailed
to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such holders are entitled to
vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the holders of Preferred Securities will be
required for the Partnership to redeem and cancel Preferred Securities in
accordance with the Limited Partnership Agreement.
Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities and any other series of SunAmerica Capital Preferred
Securities that are entitled to vote or consent with such Preferred Securities
as a single class at such time that are owned by SunAmerica or by any entity
directly or indirectly controlling or controlled by or under direct or
indirect common control with SunAmerica shall not be entitled to vote or
consent and shall, for purposes of such vote or consent, be treated as if they
were not outstanding.
Holders of the Preferred Securities will have no rights to remove or
replace a General Partner.
Book-Entry-Only Issuance - The Depository Trust Company
DTC will act as securities depository for the Preferred Securities.
The Preferred Securities will be issued only as fully registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more fully
registered global Preferred Security certificates will be issued, representing
in the aggregate the total number of Preferred Securities, and will be
deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC holds securities that its participants ("Participants") deposit with
DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by
the NYSE, the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made
by or through Direct Participants, which will receive a credit for the
Preferred Securities on DTC's records. The ownership interest of each actual
purchaser of each Preferred Security ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchases, but
Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the Direct or Indirect Participants through which the Beneficial Owners
purchased Preferred Securities. Transfers of ownership interests in the
Preferred Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests in Preferred
Securities, except in the event that use of the book-entry system for the
Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of
the Preferred Securities are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such series to be
redeemed.
Although voting with respect to the Preferred Securities is limited,
in those instances in which a vote is required, neither DTC nor Cede & Co.
itself will consent or vote with respect to Preferred Securities. Under its
usual procedures, DTC would mail an Omnibus Proxy to the Partnership as soon
as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Preferred Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Dividend payments on the Preferred Securities will be made by the
Partnership to DTC. DTC's practice is to credit Direct Participants' accounts
on the relevant payment date in accordance with their respective holdings
shown on DTC's records unless DTC has reason to believe that it will not
receive payments on such payment date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices and
will be the responsibility of such Participants and not of DTC, the
Partnership or SunAmerica, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of dividends to DTC is the
responsibility of the Partnership, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments
to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depository
with respect to the Preferred Securities at any time by giving reasonable
notice to the Partnership. Under such circumstances, if a successor
securities depository is not obtained, Preferred Security certificates will be
required to be printed and delivered. Additionally, the Partnership may
decide to discontinue use of the system of book-entry transfers through DTC
(or a successor depository). In that event, certificates for the Preferred
Securities will be printed and delivered. In each of the above circumstances,
the General Partners will appoint a paying agent with respect to the Preferred
Securities.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Partnership and SunAmerica
believe to be reliable, but the Partnership and SunAmerica take no
responsibility for the accuracy thereof.
Registrar and Transfer Agent
If the book-entry system for the Preferred Securities is
discontinued, it is anticipated that The First National Bank of Chicago or one
of its affiliates will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of the Partnership, but upon payment (with the
giving of such indemnity as the Partnership or SunAmerica may require) in
respect of any tax or other governmental charges that may be imposed in
relation to it.
The Partnership will not be required to register or cause to be
registered the transfer of Preferred Securities after such Preferred
Securities have been called for redemption.
Miscellaneous
Application will be made to list the Preferred Securities on the NYSE.
The General Partners are authorized and directed to conduct their
affairs and to operate the Partnership in such a way that the Partnership will
not be deemed to be an "investment company" required to be registered under
the 1940 Act or taxed as a corporation for United States federal income tax
purposes. In this connection, the General Partners are authorized to take any
action, not inconsistent with applicable law, the certificate of limited
partnership of the Partnership or the Limited Partnership Agreement, that the
General Partners determine in their discretion to be necessary or desirable for
such purposes, as long as such action does not adversely affect the interests
of the holders of the Preferred Securities.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee
that will be executed and delivered by SunAmerica for the benefit of the
holders from time to time of Preferred Securities. The summary does not
purport to be complete and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the Guarantee, which is
filed as an exhibit to the Registration Statement of which this Offering
Circular/Prospectus forms a part.
General
Pursuant to the Guarantee, SunAmerica will irrevocably and
unconditionally agree, to the extent set forth therein, to pay in full, to the
holders of the Preferred Securities, the Guarantee Payments (as defined below)
(without duplication of amounts theretofore paid by the Partnership), as and
when due, regardless of any defense, right of set-off or counterclaim that the
Partnership may have or assert. The following payments or distributions with
respect to Preferred Securities to the extent not paid or made by the
Partnership (the "Guarantee Payments") will be subject to the Guarantee
(without duplication): (i) any accrued and unpaid dividends that have
theretofore been declared on the Preferred Securities, (ii) the Redemption
Price, payable out of funds legally available therefor, with respect to any
Preferred Securities called for redemption by the Partnership and (iii) upon a
liquidation of the Partnership, the lesser of (a) the aggregate of the
liquidation preference and all accrued and unpaid dividends on the Preferred
Securities to the date of payment and (b) the amount of assets of the
Partnership remaining available for distribution to holders of Preferred
Securities in liquidation of the Partnership. SunAmerica's obligation to make
a Guarantee Payment may be satisfied by direct payment of the required amounts
by SunAmerica to the holders of Preferred Securities or by causing the
Partnership to pay such amounts to such holders.
If SunAmerica does not make interest payments on the Junior
Subordinated Debentures held by the Partnership, there is a substantial
likelihood that the Partnership will not declare or pay dividends on the
Preferred Securities. The Guarantee will be a full and unconditional
guarantee with respect to the Preferred Securities from the time of issuance
of the Preferred Securities, but will not apply to any payment of dividends
unless and until such dividends are declared.
Certain Covenants of SunAmerica
In the Guarantee, SunAmerica will covenant that, so long as any
SunAmerica Capital Preferred Securities remain outstanding, SunAmerica will
not declare or pay any dividends on, or purchase, acquire or make a
distribution or liquidation payment with respect to, any of its common stock
or preferred stock or make any guarantee payment with respect thereto if at
such time (i) SunAmerica shall be in default with respect to its payment
obligations under the Guarantee, (ii) there shall have occurred any Event of
Default under the Indenture or (iii) SunAmerica shall have given notice of its
selection of an Extension Period as provided in the Indenture and such period,
or any extension thereof, is continuing; provided that SunAmerica will be
permitted to pay accrued dividends (or cash in lieu of fractional shares) upon
the conversion of any of its Series D Preferred Stock in accordance with the
terms of such stock. SunAmerica will also covenant (i) to remain the sole
direct or indirect owner of the common stock of each General Partner of the
Partnership; provided that any permitted successor of SunAmerica under the
Indenture may succeed to SunAmerica's ownership of the common stock of each
General Partner, (ii) not to permit the General Partners to voluntarily
dissolve, wind-up or terminate the Partnership, except in connection with a
distribution of Junior Subordinated Debentures or other series of similar
debentures to the holders of SunAmerica Capital Preferred Securities in
liquidation of the Partnership and in connection with certain mergers,
consolidations or amalgamations permitted by the Limited Partnership
Agreement, (iii) to cause each General Partner to perform all of its duties as
a general partner of the Partnership in a timely manner and (iv) to use its
reasonable efforts to cause the Partnership to remain a limited partnership,
except in connection with a distribution of Junior Subordinated Debentures or
other series of similar debentures and in connection with certain mergers,
consolidations or amalgamations permitted by the Limited Partnership
Agreement, and otherwise continue to be treated as a partnership for United
States federal income tax purposes except in connection with a distribution of
Junior Subordinated Debentures or other series of similar debentures.
Amendments and Assignment
Except with respect to any changes that do not adversely affect the
rights of holders of SunAmerica Capital Preferred Securities (in which case no
consent will be required), the Guarantee may be amended only with the prior
approval of the holders of not less than 66 2/3% in liquidation preference of
the outstanding SunAmerica Capital Preferred Securities. The manner of
obtaining any such approval of holders of the SunAmerica Capital Preferred
Securities will be as set forth under "Description of the Preferred Securities
- -- Voting Rights". All guarantees and agreements contained in the Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
SunAmerica and shall inure to the benefit of the holders of the SunAmerica
Capital Preferred Securities then outstanding.
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect
as to the Preferred Securities upon full payment of the Redemption Price of
all Preferred Securities, and will terminate completely upon full payment of
the amounts payable in accordance with the Limited Partnership Agreement upon
liquidation of the Partnership. See "Description of the Junior Subordinated
Debentures -- Events of Default" for a description of the events of default
and enforcement rights of the holders of Junior Subordinated Debentures. The
Guarantee will continue to be effective or will be reinstated with respect to
the Preferred Securities, as the case may be, if at any time any holder of
Preferred Securities must, in accordance with the Partnership Act, restore
payment of any sums paid under the Preferred Securities or the Guarantee. The
Partnership Act provides that a limited partner of a limited partnership who
wrongfully receives a distribution may be liable to the limited partnership
for the amount of such distribution.
Status of the Guarantee
SunAmerica's obligations under the Guarantee to make the Guarantee
Payments will constitute an unsecured obligation of SunAmerica and will rank
(i) subordinate and junior in right of payment to all other liabilities of
SunAmerica, including the Junior Subordinated Debentures, except those made
pari passu by their terms, and (ii) senior to all capital stock now or
hereafter issued by SunAmerica and to any guarantee now or hereafter entered
into by SunAmerica in respect of any of its capital stock. Because SunAmerica
is a holding company, SunAmerica's obligations under the Guarantee are also
effectively subordinated to all existing and future liabilities, including
trade payables, of SunAmerica's subsidiaries, except to the extent that
SunAmerica is a creditor of the subsidiaries recognized as such. The Limited
Partnership Agreement provides that each holder of Preferred Securities by
acceptance thereof agrees to the subordination provisions and other terms of
the Guarantee.
The Guarantee will constitute a guarantee of payment and not of
collection (that is, the guaranteed party may institute a legal proceeding
directly against the guarantor to enforce its rights under the guarantee
without first instituting a legal proceeding against any other person or
entity). The Guarantee will be deposited with the General Partners to be held
for the benefit of the holders of the SunAmerica Capital Preferred Securities.
In the event of the appointment of a Special Representative to, among other
things, enforce the Guarantee, the Special Representative may take possession
of the Guarantee for such purpose. If no Special Representative has been
appointed to enforce the Guarantee, either General Partner has the right to
enforce the Guarantee on behalf of the holders of the SunAmerica Capital
Preferred Securities. The holders of not less than a majority in aggregate
liquidation preference of the SunAmerica Capital Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for
any remedy available in respect of the Guarantee, including the giving of
directions to either General Partner or the Special Representative, as the
case may be. If such General Partner or the Special Representative fails to
enforce the Guarantee as above provided, any holder of SunAmerica Capital
Preferred Securities may, after a period of 30 days has elapsed from such
holder's written request to such General Partner or the Special
Representative, as the case may be, to enforce the Guarantee, institute a
legal proceeding directly against SunAmerica to enforce its rights under the
Guarantee, without first instituting a legal proceeding against the
Partnership or any other person or entity. The Guarantee will not be
discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Partnership).
Governing Law
The Guarantee will be governed by and construed in accordance with
the laws of the State of New York.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the Junior Subordinated
Debentures which will be delivered in the SunAmerica Offer to those
participants who have made a Nonparticipation Election prior to the
Partnership Expiration Date and in which the Partnership will invest the
General Partners' Payments. The Junior Subordinated Debentures that are being
issued in exchange for Series B Preferred to those participants in the
SunAmerica Offer who do not make a Nonparticipation Election prior to the
Partnership Expiration Date will be delivered to the Partnership on behalf of
such participants, who will be issued Preferred Securities by the Partnership.
See "The Offers" and "Description of the Preferred Securities". The terms of
the Junior Subordinated Debentures include those stated in the Indenture and
the First Supplemental Indenture, forms of which have been filed as exhibits
to the Registration Statement of which this Offering Circular/Prospectus forms
a part, and the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). The following description does not purport to be complete and is
qualified in its entirety by reference to the Indenture and the Trust Indenture
Act. Whenever particular provisions or defined terms in the Indenture are
referred to herein, such provisions or defined terms are incorporated by
reference herein. Section and Article references used herein are references
to provisions of the Indenture.
Under certain circumstances involving the dissolution of the
Partnership following the occurrence of a Special Event, Junior Subordinated
Debentures may be distributed to the holders of the Preferred Securities in
liquidation of the Partnership. See "Description of the Preferred Securities
- -- Special Event Redemption or Distribution".
General
The Junior Subordinated Debentures are unsecured, subordinated
obligations of SunAmerica, limited in aggregate principal amount to an amount
equal to the liquidation preference of the Series B Preferred tendered in the
SunAmerica Offer plus an amount equal to the General Partners' Payments.
The entire principal amount of the Junior Subordinated Debentures
will become due and payable, together with any accrued and unpaid interest
thereon, on , 2025.
If any Junior Subordinated Debentures are held by any person other
than the Partnership following the Partnership Offer or are distributed to
holders of Preferred Securities in dissolution of the Partnership, such Junior
Subordinated Debentures will initially be so issued as global securities. As
described herein, under certain limited circumstances Junior Subordinated
Debentures may be issued in certificated form in exchange for global
securities. If Junior Subordinated Debentures are issued in certificated
form, such Junior Subordinated Debentures will be in denominations of $25 and
integral multiples thereof and may be transferred or exchanged at the offices
described below.
Payments on Junior Subordinated Debentures issued as global
securities will be made to DTC, as the depository for the Junior Subordinated
Debentures. If Junior Subordinated Debentures are issued in certificated
form, principal and interest will be payable, the transfer of the Junior
Subordinated Debentures will be registrable, and Junior Subordinated
Debentures will be exchangeable for Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the corporate trust
office of the Trustee in The City of New York; provided that payment of
interest may be made at the option of SunAmerica by check mailed to the
address of the persons entitled thereto.
SunAmerica does not intend to list the Junior Subordinated Debentures
on any national securities exchange and no assurance can be given as to
whether any trading market for the Junior Subordinated Debentures will develop
or as to the depth and liquidity of any such market. In addition, the Dealer
Manager has advised SunAmerica and the Partnership that, although it intends
to make a market in the Preferred Securities, it does not intend to make a
market in the Junior Subordinated Debentures, and SunAmerica and the
Partnership are not aware of any other person who expects to make such a
market. It is possible that only a small number of Junior Subordinated
Debentures will be held by persons other than the Partnership and therefore,
such securities may be highly illiquid. If the Junior Subordinated Debentures
are distributed to the holders of Preferred Securities upon the dissolution of
the Partnership, SunAmerica will use its best efforts to list the Junior
Subordinated Debentures on the NYSE or on such other exchange on which the
Preferred Securities are then listed.
Optional Redemption
SunAmerica shall have the right to redeem the Junior Subordinated
Debentures, in whole or in part, from time to time, on or after June 15, 1997,
upon not less than 30 nor more than 60 days' notice, at a redemption price
equal to 100% of the principal amount to be redeemed, plus any accrued and
unpaid interest, to the redemption date. If SunAmerica or any of its
subsidiaries purchase Preferred Securities by tender, in the open market or by
private agreement, SunAmerica shall have the right to redeem Junior
Subordinated Debentures held by the Partnership, in a principal amount not to
exceed the aggregate stated liquidation preference of the Preferred Securities
so purchased, together with any accrued and unpaid interest thereon, to the
redemption date.
If SunAmerica gives a notice of redemption in respect of Junior
Subordinated Debentures (which notice will be irrevocable) then, by 12:00
noon, New York City time, on the redemption date, SunAmerica will deposit
irrevocably with the trustee or, if the Junior Subordinated Debentures are
then issued in book entry form, with DTC, funds sufficient to pay the
applicable redemption price and will give DTC irrevocable instructions and
authority to pay such redemption price to the holders of the Junior
Subordinated Debentures. See "-- Book Entry and Settlement". If notice of
redemption shall have been given and funds deposited as required, then upon
the date of such deposit, all rights of holders of such Junior Subordinated
Debentures so called for redemption will cease, except the right of the
holders of such Junior Subordinated Debentures to receive the applicable
redemption price, but without interest on such redemption price. If any date
fixed for redemption of Junior Subordinated Debentures is not a Business Day,
then payment of the redemption price payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the redemption price in
respect of Junior Subordinated Debentures is improperly withheld or refused
and not paid by SunAmerica, interest on such Junior Subordinated Debentures
will continue to accrue, from the original redemption date to the date of
payment, in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the applicable redemption
price.
Interest
The Junior Subordinated Debentures will bear interest at an annual
rate of % from the Accrual Date. In addition, holders of the Junior
Subordinated Debentures will be entitled to interest at the rate of 9 1/4% per
annum of the principal amount thereof from December 15, 1994 through the
SunAmerica Expiration Date, in lieu of dividends accumulating after December
15, 1994 on their Series B Preferred accepted for exchange, payable at the
time of the first interest payment on the Junior Subordinated Debentures.
Interest will be payable monthly in arrears on the last day of each month of
each year (each, an "Interest Payment Date"), commencing on the last day of
the month in which the Partnership Expiration Date occurs, to the person in
whose name such Junior Subordinated Debenture is registered, subject to
certain exceptions, at the close of business on the relevant record dates,
which, as long as the Junior Subordinated Debentures not held by the
Partnership remain in book-entry-only form, will be the Business Day next
preceding such Interest Payment Date. If the Junior Subordinated Debentures
not held by the Partnership shall not continue to remain in book-entry-only
form, SunAmerica shall have the right to select record dates that shall be
more than one Business Day prior to the Interest Payment Date.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. If any date on which
interest is payable on the Junior Subordinated Debentures is not a Business
Day, then payment of the interest payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
Compounded Interest
Payments of Compounded Interest on the Junior Subordinated Debentures
held by the Partnership will make funds available to pay any interest on
dividends in arrears in respect of the Preferred Securities pursuant to the
terms thereof.
Option to Extend Interest Payment Period
So long as SunAmerica shall not be in default in the payment of
interest on the Junior Subordinated Debentures, SunAmerica shall have the
right to extend the interest payment period from time to time for a period not
exceeding 60 consecutive months. SunAmerica has no current intention of
exercising its right to extend an interest payment period. No extension of
interest will be permitted with respect to interest accruing from December 15,
1994 through the SunAmerica Expiration Date. No interest shall be due and
payable during an Extension Period, except at the end thereof. During any
Extension Period, SunAmerica shall not declare or pay any dividends on, or
purchase, acquire or make a distribution or liquidation payment with respect
to, any of its common stock or preferred stock; provided that SunAmerica will
be permitted to pay accrued dividends (or cash in lieu of fractional shares)
upon the conversion of any of its Series D Preferred Stock in accordance with
the terms of such stock. Prior to the termination of any such Extension
Period, SunAmerica may further extend the interest payment period; provided
that such Extension Period together with all such previous and further
extensions thereof may not exceed 60 consecutive months. On the interest
payment date occurring at the end of each Extension Period, SunAmerica shall
pay to the Partnership and any other holders of Junior Subordinated Debentures
of record on the record date for such interest payment date (regardless of who
the holders of record may have been on other dates during the Extension
Period) all accrued and unpaid interest on the Junior Subordinated Debentures.
Upon the termination of any Extension Period and the payment of all amounts
then due, SunAmerica may commence a new Extension Period, subject to the above
requirements. SunAmerica may also prepay at any time all or any portion of the
interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths (up to six Extension Periods of
60 consecutive months each or more numerous shorter Extension Periods)
throughout the term of the Junior Subordinated Debentures. The failure by
SunAmerica to make interest payments during an Extension Period would not
constitute a default or an event of default under SunAmerica's currently
outstanding indebtedness. If the Partnership shall be the sole holder of the
Junior Subordinated Debentures, SunAmerica shall give the Partnership notice
of its selection of such Extension Period one Business Day prior to the
earlier of (i) the date the dividends on the Preferred Securities are payable
or (ii) the date the Partnership is required to give notice to the NYSE or
other applicable self-regulatory organization or to holders of the Preferred
Securities of the record date or the date such dividend is payable, but in any
event not less than one Business Day prior to such record date. SunAmerica
shall cause the General Partners to cause the Partnership to give notice of
SunAmerica's selection of such Extension Period to the holders of the
Preferred Securities. If the Partnership shall not be the sole holder of the
Junior Subordinated Debentures, SunAmerica shall give the holders of the
Junior Subordinated Debentures notice of its selection of such Extension
Period ten Business Days prior to the earlier of (i) the next succeeding
Interest Payment Date or (ii) the date SunAmerica is required to give notice
to the NYSE (if the Junior Subordinated Debentures are then listed thereon) or
other applicable self-regulatory organization or to holders of the Junior
Subordinated Debentures of the record or payment date of such related interest
payment, but in any event not less than two Business Days prior to such record
date.
Set-Off
Notwithstanding anything to the contrary in the Indenture, SunAmerica
shall have the right to set-off any payment it is otherwise required to make
to the Partnership thereunder if and to the extent SunAmerica has theretofore
made, or is concurrently on the date of such payment making, a payment under
the Guarantee.
Subordination
The Indenture provides that the Junior Subordinated Debentures are
subordinate and junior in right of payment to all Senior Indebtedness of
SunAmerica but senior to its capital stock, as provided in the Indenture. In
the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of SunAmerica or its property, or (b) that the Junior Subordinated
Debentures are declared due and payable before their expressed maturity
because of the occurrence of an Event of Default pursuant to Section 6.01 of
the Indenture (under circumstances other than as set forth in clause (a)
above), then the holders of all Senior Indebtedness shall first be entitled to
receive payment of the full amount due thereon in money, before the holders of
any of the Junior Subordinated Debentures are entitled to receive a payment on
account of the principal of, premium, if any, or interest on the indebtedness
evidenced by such Junior Subordinated Debentures. In the event and during the
continuation of any default in payment of any Senior Indebtedness or if any
event of default shall exist under any Senior Indebtedness, as "event of
default" is defined therein or in the agreement under which the same is
outstanding, no payment of the principal or interest on the Junior
Subordinated Debentures shall be made. (Section 14.02)
The term "Senior Indebtedness" shall mean the principal of and
premium, if any, and interest on (a) all indebtedness of SunAmerica, whether
outstanding on the date of the Indenture or thereafter created, (i) for money
borrowed by SunAmerica (including, without limitation, indebtedness issued or
to be issued pursuant to the Indenture dated as of April 15, 1993 between
SunAmerica and The First National Bank of Chicago, as Trustee), (ii) for money
borrowed by, or obligations of, others and either assumed or guaranteed,
directly or indirectly, by SunAmerica, (iii) in respect of letters of credit
and acceptances issued or made by banks, or (iv) constituting purchase money
indebtedness, or indebtedness secured by property included in the property,
plant and equipment accounts of SunAmerica at the time of the acquisition of
such property by SunAmerica, for the payment of which SunAmerica is directly
liable, and (b) all deferrals, renewals, extensions and refundings of, and
amendments, modifications and supplements to, any such indebtedness. As used
in the preceding sentence the term "purchase money indebtedness" means
indebtedness evidenced by a note, debenture, bond or other instrument (whether
or not secured by any lien or other security interest) issued or assumed as
all or a part of the consideration for the acquisition of property, whether by
purchase, merger, consolidation or otherwise, unless by its terms such
indebtedness is subordinate to other indebtedness of SunAmerica.
Notwithstanding anything to the contrary in the Indenture or the Junior
Subordinated Debentures, Senior Indebtedness shall not include (i) the Junior
Subordinated Debentures, (ii) any indebtedness of SunAmerica which, by its
terms or the terms of the instrument creating or evidencing it, is subordinate
in right of payment to or pari passu with the Junior Subordinated Debentures or
(iii) any indebtedness of SunAmerica to a subsidiary of SunAmerica. (Section
1.01)
The Indenture does not limit the aggregate amount of indebtedness,
including Senior Indebtedness, that may be issued. As of September 30, 1994,
Senior Indebtedness of SunAmerica (on an unconsolidated basis) aggregated
approximately $738,189,000, all of which is unsecured. Because SunAmerica is
a holding company, the Junior Subordinated Debentures are also effectively
subordinated to all existing and future liabilities, including trade payables,
of SunAmerica's subsidiaries, except to the extent that SunAmerica is a
creditor of the subsidiaries recognized as such. At September 30, 1994,
SunAmerica's subsidiaries had outstanding approximately $8,171,532,000 of
indebtedness and other liabilities (excluding variable annuity liabilities,
with respect to which assets are segregated in separate accounts). There are
no terms in the Preferred Securities, the Junior Subordinated Debentures or the
Guarantee that limit SunAmerica's ability to incur additional indebtedness,
including indebtedness that ranks senior to or pari passu with the Junior
Subordinated Debentures and the Guarantee, or the ability of its subsidiaries
to incur additional indebtedness. See "Description of the Guarantee -- Status
of the Guarantee".
Events of Default
The Indenture provides that any one or more of the following
described events, which has occurred and is continuing, constitutes an "Event
of Default" with respect to the Junior Subordinated Debentures:
(a) failure for 30 days to pay interest on the Junior Subordinated
Debentures when due; provided that a valid extension of the interest payment
period by SunAmerica shall not constitute a default in the payment of interest
for this purpose; or
(b) failure to pay principal or premium, if any, on the Junior
Subordinated Debentures when due whether at maturity, upon redemption, by
declaration or otherwise; or
(c) failure to observe or perform any other covenant contained in
the Indenture for 90 days after written notice to SunAmerica from the Trustee
or the holders of at least 25% in principal amount of the outstanding Junior
Subordinated Debentures; or
(d) certain events in bankruptcy, insolvency or reorganization of
SunAmerica.
(Section 6.01).
The holders of a majority in aggregate outstanding principal amount
of the Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee. (Section 6.06). The Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of the Junior Subordinated Debentures
may declare the principal due and payable immediately upon an Event of
Default, but the holders of a majority in aggregate outstanding principal
amount may annul such declaration and waive the default if the default has
been cured and a sum sufficient to pay all matured installments of interest
and principal otherwise than by acceleration and any premium has been
deposited with the Trustee. (Sections 6.01 and 6.06).
The holders of a majority in aggregate outstanding principal amount
of the Junior Subordinated Debentures may, on behalf of the holders of all the
Junior Subordinated Debentures, waive any past default, except a default in
the payment of principal, premium, if any, or interest (unless such default
has been cured and a sum sufficient to pay all matured installments of
interest and principal otherwise than by acceleration and any premium has been
deposited with the Trustee) or a call for redemption of Junior Subordinated
Debentures. (Section 6.06). SunAmerica is required to file annually with the
Trustee a certificate as to whether or not SunAmerica is in compliance with
all the conditions and covenants under the Indenture.
Enforcement of Certain Rights by Special Representative
If (i) arrearages of dividends on the Preferred Securities shall
exist for 18 consecutive monthly dividend periods; (ii) an Event of Default
occurs and is continuing on the Junior Subordinated Debentures; or (iii)
SunAmerica is in default on any of its payment obligations under the
Guarantee, under the terms of the Preferred Securities, the holders of
outstanding Preferred Securities will have the rights referred to under
"Description of the Preferred Securities -- Voting Rights", including the
right to appoint a Special Representative, which Special Representative shall
be authorized to exercise the Partnership's right to accelerate the principal
amount of the Junior Subordinated Debentures upon an Event of Default and to
enforce the Partnership's other creditor rights under the Junior Subordinated
Debentures. In the case of clause (i) above, if the Partnership's failure to
pay dividends is a consequence of SunAmerica's exercise of its right to extend
the interest payment period for the Junior Subordinated Debentures as
described under "-- Option to Extend Interest Payment Period", the Special
Representative will have no right to enforce the payment of dividends until an
Event of Default shall have occurred. Notwithstanding the appointment of any
such Special Representative, the General Partners shall each continue as
General Partner, and any extension for a period not exceeding 60 months will
not constitute a default under the Indenture or enable a holder of Preferred
Securities to require the payment of a dividend that has not theretofore been
declared.
Modification of the Indenture
The Indenture contains provisions permitting SunAmerica and the
Trustee, with the consent of the holders of not less than a majority in
principal amount of the outstanding Junior Subordinated Debentures, to modify
the Indenture or any supplemental indenture affecting the rights of the
holders of Junior Subordinated Debentures; provided, that no such modification
may, without the consent of the holder of each outstanding Junior Subordinated
Debenture affected thereby, (i) extend the fixed maturity of any Junior
Subordinated Debentures, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce any premium
payable upon the redemption thereof, without the consent of the holder of each
Junior Subordinated Debenture so affected or (ii) reduce the percentage of
Junior Subordinated Debentures, the holders of which are required to consent to
any such supplemental indenture, without the consent of the holders of each
Junior Subordinated Debenture then outstanding and affected thereby. (Section
9.02).
Book-Entry and Settlement
If any Junior Subordinated Debentures are held by any person other
than the Partnership following the Partnership Offer, or are distributed to
holders of Preferred Securities in dissolution of the Partnership, such Junior
Subordinated Debentures will be issued in the form of one or more global
certificates registered in the name of Cede & Co., the nominee of DTC.
For a description of DTC and DTC's book-entry system, see
"Description of the Preferred Securities -- Book-Entry-Only Issuance - The
Depository Trust Company". As of the date of this Offering
Circular/Prospectus, the description herein of DTC's book-entry system and
DTC's practices as they relate to purchases, transfers, notices and payments
with respect to the Preferred Securities apply in material respects to any
debt obligations of SunAmerica represented by one or more global securities
held by DTC.
Consolidation, Merger and Sale
The Indenture will provide that SunAmerica may not consolidate with
or merge into any other person or transfer or lease its property and assets
substantially as an entirety to any person and may not permit any person to
merge into or consolidate with SunAmerica unless (i) either SunAmerica will be
the resulting or surviving entity or any successor or purchaser is a
corporation organized under the laws of the United States of America, any
State or the District of Columbia, and any such successor or purchaser
expressly assumes SunAmerica's obligations under the Indenture and (ii)
immediately after giving effect to the transaction no Event of Default shall
have occurred and be continuing.
Defeasance and Discharge
Under the terms of the Indenture, SunAmerica will be discharged from
any and all obligations in respect of the Junior Subordinated Debentures
(except in each case for certain obligations to register the transfer or
exchange of Junior Subordinated Debentures, replace stolen, lost or mutilated
Junior Subordinated Debentures, maintain paying agencies and hold moneys for
payment in trust) if (i) SunAmerica irrevocably deposits with the Trustee cash
or U.S. Government Obligations, as trust funds in an amount certified to be
sufficient to pay at maturity (or upon redemption) the principal of, premium,
if any, and interest on all outstanding Junior Subordinated Debentures; (ii)
SunAmerica delivers to the Trustee an opinion of counsel to the effect that
the holders of the Junior Subordinated Debentures will not recognize income,
gain or loss for United States federal income tax purposes as a result of such
defeasance and that defeasance will not otherwise alter such holders' United
States federal income tax treatment of principal, premium and interest
payments on such Junior Subordinated Debentures (such opinion must be based on
a ruling of the Internal Revenue Service or a change in United States federal
income tax law occurring after the date of such Indenture, since such a result
would not occur under current tax law); and (iii) no event or condition shall
exist that, pursuant to certain provisions described under "Subordination"
above, would prevent SunAmerica from making payments of principal of, premium,
if any, and interest on the Junior Subordinated Debentures at the date of the
irrevocable deposit referred to above. (Sections 11.01 and 11.02).
Governing Law
The Indenture and the Junior Subordinated Debentures will be governed
by, and construed in accordance with, the laws of the State of New York.
(Section 13.05).
Information Concerning the Trustee
The Trustee, prior to default, undertakes to perform only such duties
as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. (Section 7.01). Subject to such
provision, the Trustee is under no obligation to exercise any of the powers
vested in it by the Indenture at the request of any holder of Junior
Subordinated Debentures, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities that might be incurred thereby.
(Section 7.02). The Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its
duties if the Trustee reasonably believes that repayment or adequate indemnity
is not reasonably assured to it. (Section 7.01). The Trustee is one of a
number of banks with which SunAmerica and its subsidiaries maintain ordinary
banking and trust relationships.
Miscellaneous
SunAmerica will have the right at all times to assign any of its
rights or obligations under the Indenture to a direct or indirect wholly-owned
subsidiary of SunAmerica; provided, that, in the event of any such assignment,
SunAmerica will remain jointly and severally liable for all such obligations.
Subject to the foregoing, the Indenture will be binding upon and inure to the
benefit of the parties thereto and their respective successors and assigns.
The Indenture provides that it may not otherwise be assigned by the parties
thereto other than by SunAmerica to a successor or purchaser pursuant to a
consolidation, merger or sale permitted by the Indenture. (Section 13.11).
RELATIONSHIP BETWEEN THE PREFERRED SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As long as payments of interest and other payments are made when due
on the Junior Subordinated Debentures held by the Partnership, such payments
will be sufficient to cover dividends (if and to the extent declared) and
other payments due on the Preferred Securities primarily because (i) the
aggregate principal amount of Junior Subordinated Debentures will be equal to
the sum of the aggregate stated liquidation preference of the Preferred
Securities and the General Partners' Payment; (ii) the interest rate and
interest and other payment dates on the Junior Subordinated Debentures will
match the dividend rate and dividend and other payment dates for the Preferred
Securities; (iii) the Limited Partnership Agreement provides that the General
Partners shall pay for all (and the Partnership shall not be obligated to pay,
directly or indirectly, for any) costs and expenses of the Partnership,
including any income taxes, duties and other governmental charges, and all
costs and expenses with respect thereto, to which the Partnership may become
subject, except for United States withholding taxes; and (iv) the Limited
Partnership Agreement further provides that the General Partners shall not
cause or permit the Partnership, among other things, to engage in any activity
that is not consistent with the limited purposes of the Partnership. With
respect to clause (iii) above, however, no assurance can be given that the
General Partners will have sufficient resources to enable them to pay such
costs and expenses on behalf of the Partnership.
Payments of dividends (if and to the extent declared) and other
payments due on the Preferred Securities are guaranteed by SunAmerica as and
to the extent set forth under "Description of the Guarantee". If SunAmerica
does not make interest payments on the Junior Subordinated Debentures held by
the Partnership, there is a substantial likelihood that the Partnership will
not declare or pay dividends on the Preferred Securities. Under the Limited
Partnership Agreement, if and to the extent SunAmerica does make interest
payments on the Junior Subordinated Debentures, the Partnership is obligated,
to the extent funds are legally available therefor, to declare dividends on
the Preferred Securities. The Guarantee is a full and unconditional guarantee
from the time of issuance of the Preferred Securities, but does not apply to
any payment of dividends unless and until such dividends are declared.
If an Event of Default occurs and is continuing, the Limited
Partnership Agreement provides a mechanism whereby the holders of the
Preferred Securities may appoint a Special Representative to enforce the
rights of the Partnership under the Junior Subordinated Debentures held by the
Partnership. The Limited Partnership Agreement also provides, and SunAmerica,
under the Guarantee, acknowledges, that a Special Rpresentative may be
appointed to enforce the Guarantee if SunAmerica is in default on any of its
payment obligations under the Guarantee. In addition, if the General Partners
or the Special Representative fails to enforce the Guarantee, a holder of a
Preferred Security may, after a period of 30 days has elapsed from such
holder's written request to a General Partner or the Special Representative,
as the case may be, to enforce the Guarantee, institute a legal proceeding
directly against SunAmerica to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Partnership or any other
person or entity.
If a Special Event shall occur and be continuing, the General
Partners may elect to dissolve the Partnership, and, in the manner described
in "Description of the Preferred Securities -- Liquidation Distribution Upon
Dissolution", to cause Junior Subordinated Debentures held by the Partnership
having an aggregate principal amount equal to the aggregate stated liquidation
preference of, with an interest rate identical to the dividend rate of, and
accrued and unpaid interest equal to accrued and unpaid dividends (whether or
not declared) on, the Preferred Securities to be distributed in exchange for
the outstanding Preferred Securities. The Preferred Securities represent
limited partnership interests in the Partnership, a limited partnership which
exists for the sole purpose of issuing its partnership interests in exchange
for debt securities of SunAmerica and investing the contributions by the
General Partners and the proceeds of any sale of additional partnership
interests in such debt securities. A principal difference between the rights
of a holder of Preferred Securities and a holder of Junior Subordinated
Debentures is that the Junior Subordinated Debentures will accrue, and
(subject to the permissible extension of the interest period) a holder thereof
will be entitled to receive, interest on the principal amount of Junior
Subordinated Debentures held, while a holder of Preferred Securities is only
entitled to receive dividends if and to the extent declared by the General
Partners.
Upon any voluntary or involuntary dissolution, winding-up or
termination of the Partnership, the holders of Preferred Securities will be
entitled to receive, out of assets legally available for distribution to
partners, the Liquidation Distribution in cash or Junior Subordinated
Debentures and will be entitled to the benefits of the Guarantee with respect
to any such distribution. See "Description of the Preferred Securities --
Liquidation Distribution Upon Dissolution". Upon any voluntary or involuntary
liquidation or bankruptcy of SunAmerica, the holders of Junior Subordinated
Debentures would be subordinated creditors of SunAmerica, subordinated in
right of payment to all Senior Indebtedness, but entitled to receive payment
in full of principal, premium, if any, and interest, before any stockholders
of SunAmerica receive payments or distributions.
A default or event of default under any Senior Indebtedness would not
constitute a default or event of default under the Junior Subordinated
Debentures. However, in the event of payment defaults under, or acceleration
of, Senior Indebtedness, the subordination provisions of the Junior
Subordinated Debentures provide that no payments may be made in respect of the
Junior Subordinated Debentures. Failure to make required payments on the
Junior Subordinated Debentures would constitute an event of default under the
Indenture.
TAXATION
In the opinion of Davis Polk & Wardwell, counsel to SunAmerica and
the Partnership, the following are the material United States federal income
tax consequences of the exchange of Series B Preferred pursuant to the
SunAmerica Offer, the issuance of Preferred Securities pursuant to the
Partnership Offer and of the ownership and disposition of Preferred Securities
and Junior Subordinated Debentures. Unless otherwise stated, this summary
deals only with Preferred Securities and Junior Subordinated Debentures held
as capital assets by holders who acquire the Preferred Securities and the
Junior Subordinated Debentures pursuant to the Partnership Offer and the
SunAmerica Offer ("Initial Holders"). It does not deal with special classes
of holders, such as dealers in securities or currencies, life insurance
companies, persons holding Preferred Securities and Junior Subordinated
Debentures as a hedge against or which are hedged against currency risks or as
part of a straddle, or persons whose functional currency is not the United
States dollar. This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations thereunder and administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change (possibly on a retroactive basis).
ALL SERIES B PREFERRED HOLDERS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF SERIES B
PREFERRED FOR JUNIOR SUBORDINATED DEBENTURES AND THE ISSUANCE OF PREFERRED
SECURITIES IN EXCHANGE FOR JUNIOR SUBORDINATED DEBENTURES AND OF THE OWNERSHIP
AND DISPOSITION OF PREFERRED SECURITIES AND JUNIOR SUBORDINATED DEBENTURES IN
LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE,
LOCAL OR OTHER TAX LAWS.
Exchange of Series B Preferred and Issuance
of Preferred Securities
The exchange of Series B Preferred for Junior Subordinated Debentures
pursuant to the SunAmerica Offer will be a taxable transaction. In the case
of a Holder who owns solely Series B Preferred, or not more than one percent
of such stock and not more than one percent of any other class of SunAmerica
stock, gain or loss will be recognized in an amount equal to the difference
between the fair market value on the SunAmerica Expiration Date of the Junior
Subordinated Debentures received in the exchange and the exchanging Holder's
tax basis in the Series B Preferred exchanged therefor and will be long-term
capital gain or loss if the Series B Preferred has been held for more than one
year as of such date. A holder's aggregate tax basis in the Junior
Subordinated Debentures will be equal to their fair market value on the
SunAmerica Expiration Date.
Holders of Series B Preferred who actually or constructively own more
than one percent of any class of SunAmerica stock are advised to consult their
tax advisors as to the income tax consequences of exchanging Series B
Preferred.
The issuance of Preferred Securities to former Holders of Series B
Preferred in exchange for Junior Subordinated Debentures pursuant to the
Partnership Offer will not be a taxable event. A holder's aggregate tax basis
in the Preferred Securities will be equal to the tax basis of the Junior
Subordinated Debentures exchanged therefor.
Income from the Preferred Securities
The Partnership will be treated as a partnership for United States
federal income tax purposes. Each holder of Preferred Securities (a
"Securityholder") will be required to include in gross income the
Securityholder's distributive share of the Partnership's income from the
Junior Subordinated Debentures, which will generally be equal to the amount of
stated interest (excluding "Pre-issuance Accrued Interest" as described below)
received or accrued on the Junior Subordinated Debentures. However, if the
"issue price" of the Junior Subordinated Debentures is less than their stated
principal amount, the Partnership will be required to accrue the difference as
additional "original issue discount" over the term of the Junior Subordinated
Debentures and include such amounts in income, and each Securityholder's
distributive share will exceed the amount of stated interest (excluding
"Pre-issuance Accrued Interest") received or accrued on the Junior Subordinated
Debentures. If the "issue price" of the Junior Subordinated Debentures is
greater than their stated principal amount, the Securityholder's distributive
share of the Partnership's income will be less than the amount of stated
interest received or accrued on the Junior Subordinated Debentures.
In the event that SunAmerica exercises its right to extend the
interest payment period on the Junior Subordinated Debentures before the
Junior Subordinated Debentures are distributed in liquidation of the
Partnership, the Partnership will continue to accrue income in respect of the
Junior Subordinated Debentures, which will be allocated, but not distributed,
to beneficial owners of Preferred Securities on the last day of each month.
As a result, beneficial owners of Preferred Securities during an Extension
Period will include their distributive shares of the interest in gross income
in advance of the receipt of cash, and any such owners who dispose of
Preferred Securities prior to the record date for the payment of dividends
following such extended Extension Period will not receive from the Partnership
any cash related thereto.
Any distributive share amount included in a Securityholder's gross
income will increase his tax basis in the Preferred Securities, and the amount
of cash dividends (including the amount of Pre-issuance Accrued Interest) paid
to the Securityholder will reduce such Securityholder's tax basis in the
Preferred Securities. No portion of the amounts received on the Preferred
Securities will be eligible for the dividends received deduction.
The Partnership does not presently intend to make an election under
Section 754 of the Code. As a result, a subsequent purchaser of Preferred
Securities will not be permitted to adjust its taxable income from the
Partnership to reflect any difference between its purchase price for the
Preferred Securities and the Partnership's underlying tax basis for its assets.
Disposition of the Preferred Securities
Gain or loss will be recognized on a sale, exchange or other
disposition of the Preferred Securities (including a distribution of cash in
redemption of all of a Securityholder's Preferred Securities but excluding the
distribution of Junior Subordinated Debentures) equal to the difference
between the amount realized and the Securityholder's tax basis in the
Preferred Securities disposed of. In the case of a cash distribution in
partial redemption of a Securityholder's Preferred Securities, no loss will be
recognized, the Securityholder's tax basis in the Preferred Securities will be
reduced by the amount of the distribution, and the Securityholder will
recognize gain to the extent, if any, that the amount of the distribution
exceeds the Securityholder's tax basis in the Preferred Securities. Gain or
loss recognized by a Securityholder on the sale or exchange of Preferred
Securities held for more than one year will generally be taxable as long-term
capital gain or loss. In certain circumstances, a portion of the proceeds
received upon a disposition of a Preferred Security by an investor other than
an Initial Holder may be treated as ordinary income.
Distribution of Junior Subordinated Debentures to Holders of Preferred
Securities
A distribution by the Partnership of the Junior Subordinated
Debentures in liquidation of the Partnership, as described under the caption
"Description of the Preferred Securities -- Special Event Redemption or
Distribution", will be non-taxable and generally will result in the
Securityholder receiving an aggregate tax basis in the Junior Subordinated
Debentures equal to such Securityholder's aggregate tax basis in its Preferred
Securities. A Securityholder's holding period in the Junior Subordinated
Debentures so received will include the period for which such Preferred
Securities were held by the Securityholder.
Original Issue Discount on the Junior Subordinated Debentures
Because SunAmerica has the right to extend the interest payment
period on the Junior Subordinated Debentures, the Junior Subordinated
Debentures will be treated as issued with "original issue discount" for United
States federal income tax purposes. As a result, a holder of Junior
Subordinated Debentures, including a taxpayer who otherwise uses the cash
method of accounting, will be required to include "original issue discount" in
income as it accrues before the receipt of cash payments attributable to such
income. The amount of "original issue discount" included in each accrual
period is expected to be approximately equal to the amount of stated interest,
excluding the amount of additional interest at the rate of 9 1/4% per annum of
the principal amount of the Junior Subordinated Debentures from December 15,
1994 through the SunAmerica Expiration Date ("Pre-issuance Accrued Interest"),
received or accrued on the Junior Subordinated Debentures. However, if the
fair market value of each share of Series B Preferred on the SunAmerica
Expiration Date reduced by Pre-issuance Accrued Interest (the "issue price" of
the Junior Subordinated Debentures) is less than the stated principal amount
of the Junior Subordinated Debentures, the difference will be treated as
additional "original issue discount" to be accrued over the term of the Junior
Subordinated Debentures notwithstanding that such difference might otherwise
be considered "de minimis". If the "issue price" of the Junior Subordinated
Debentures is greater than their stated principal amount, the amount of
"original issue discount" included in each accrual period will be less than the
amount of the stated interest received or accrued on the Junior Subordinated
Debentures. A Junior Subordinated Debenture holder's tax basis in the Junior
Subordinated Debentures generally will be increased by the amount of "original
issue discount" included in income and reduced by the payment of stated
interest.
Treatment of the Payment of Pre-issuance Accrued Interest on the Junior
Subordinated Debentures
"Pre-issuance Accrued Interest" payable on the first Interest Payment
Date should be treated as a return of capital, reducing the Junior
Subordinated Debenture holder's tax basis in the Junior Subordinated
Debentures.
Potential Extension of Payment Period
on the Junior Subordinated Debentures
In the event that SunAmerica exercises its right to extend the
interest payment period, SunAmerica generally may not declare or pay dividends
on, or purchase or acquire, any of its common stock or preferred stock.
SunAmerica has no current intention of exercising its right to extend an
interest payment period.
Holders of Junior Subordinated Debentures will continue to accrue
"original issue discount" during an extended interest payment period, and any
holders who dispose of Junior Subordinated Debentures prior to the record date
for the payment of interest following such extended interest payment period
will not receive from SunAmerica any cash related thereto.
Market Discount and Bond Premium on the Junior Subordinated Debentures
Junior Subordinated Debenture holders other than Initial Holders may
be considered to have acquired the Junior Subordinated Debentures with market
discount, acquisition premium or amortizable bond premium. Such holders are
advised to consult their tax advisors as to the income tax consequences of the
acquisition, ownership and disposition of the Junior Subordinated Debentures.
Disposition or Retirement of the Junior Subordinated Debentures
Upon the sale, exchange or retirement of the Junior Subordinated
Debentures, a Junior Subordinated Debenture holder will recognize taxable gain
or loss equal to the difference between the amount realized on the sale,
exchange or retirement and such holder's adjusted tax basis in the Junior
Subordinated Debentures. Gain or loss will be capital gain or loss (except to
the extent of any accrued market discount). See "Market Discount and Bond
Premium on the Junior Subordinated Debentures" above. Such gain or loss will
be long-term capital gain or loss if the Junior Subordinated Debentures have
been held for more than one year.
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is
any corporation, individual, partnership, estate or trust that is, as to the
United States, a foreign corporation, a non-resident alien individual, a
foreign partnership or a non-resident fiduciary of a foreign estate or trust.
Under present United States federal income tax law:
(i) payments by the Partnership or any of its paying agents to
any holder of a Preferred Security who or which is a United States
Alien Holder and payments of principal or interest by SunAmerica on
the Junior Subordinated Debentures to any holder of a Junior
Subordinated Debenture who or which is a United States Alien Holder
will not be subject to United States federal withholding tax,
provided that (a) the beneficial owner of the Preferred Security or
Junior Subordinated Debenture, as the case may be, does not actually
or constructively own 10% or more of the total combined voting power
of all classes of stock of SunAmerica entitled to vote, (b) the
beneficial owner of the Preferred Security or Junior Subordinated
Debenture, as the case may be, is not a controlled foreign
corporation that is related to SunAmerica through stock ownership,
and (c) either (A) the beneficial owner of the Preferred Security or
Junior Subordinated Debenture certifies to the Partnership or its
agent, under penalties of perjury, that it is not a United States
holder and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business
(a "Financial Institution") and holds the Preferred Security or Junior
Subordinated Debenture certifies to the Partnership or its agent
under penalties of perjury that such statement has been received from
the beneficial owner by it or by a Financial Institution between it
and the beneficial owner and furnishes the Partnership or its agent
with a copy thereof; and
(ii) a United States Alien Holder of a Preferred Security or
Junior Subordinated Debenture will not be subject to United States
federal withholding tax on any gain realized upon the sale or other
disposition of a Preferred Security or Junior Subordinated Debenture.
(iii) any gain realized by a United States Alien Holder upon the
exchange of Series B Preferred for Junior Subordinated Debentures
will not be subject to United States federal withholding tax.
Partnership Information Returns
Within 90 days after the close of every taxable year of the
Partnership, the General Partners of the Partnership will furnish or cause to
be furnished to each holder of the Preferred Securities and the Internal
Revenue Service a schedule setting forth such Securityholder's allocable share
of income for the Partnership's taxable year.
LEGAL MATTERS
The validity of the Preferred Securities, the Guarantee and the
Junior Subordinated Debentures will be passed upon for the Partnership and
SunAmerica by Susan L. Harris, Vice President and General Counsel - Corporate
Affairs of SunAmerica, and by Davis Polk & Wardwell, New York, New York. Ms.
Harris and Davis Polk & Wardwell will rely as to matters of Maryland law on
Piper & Marbury, Baltimore, Maryland. Ms. Harris holds options, granted under
SunAmerica's Employee Stock Plan, to purchase in the aggregate less than 1% of
SunAmerica's common stock. David W. Ferguson, a partner of Davis Polk &
Wardwell, is a director of First SunAmerica Life Insurance Company, a
subsidiary of SunAmerica.
EXPERTS
The consolidated financial statements incorporated in this Offering
Circular/Prospectus by reference to the Annual Report on Form 10-K for the
year ended September 30, 1994 have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
ERISA MATTERS
SunAmerica and certain affiliates of SunAmerica, including Anchor
National Life Insurance Company and Sun Life Insurance Company of America, may
each be considered a "party in interest" within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or a
"disqualified person" within the meaning of the Code with respect to many
employee benefit plans. Prohibited transactions within the meaning of ERISA
or the Code may arise, for example, if the securities offered hereby are
acquired by a pension or other employee benefit plan with respect to which
SunAmerica or any of its affiliates is a service provider, unless such
securities are acquired pursuant to an exemption for transactions effected on
behalf of such plan by a "qualified professional asset manager" or pursuant to
any other available exemption. Any such pension or employee benefit plan
proposing to invest in the securities offered hereby should consult with its
legal counsel.
Facsimile copies of the Letter of Transmittal and the
Nonparticipation Election Letter will be accepted. Letters of Transmittal,
Nonparticipation Election Letters, certificates representing shares of Series
B Preferred and any other required documents should be sent by each Holder of
Series B Preferred or his broker, dealer, commercial bank, trust company or
other nominee to the Exchange Agent at one of the addresses as set forth below:
The Exchange Agent is:
The First National Bank of Chicago
<TABLE>
<S> <C>
By Hand or Overnight Courier in By Hand or Overnight Courier in
Chicago: New York:
The First National Bank of Chicago, First Chicago Trust Company of
Exchange Agent New York
One North State Street 14 Wall Street
9th Floor 8th Floor
Attention: Securities Processing New York, New York 10005
Suite 0124
Chicago, Illinois 60602
</TABLE>
By Mail:
The First National Bank of Chicago,
Exchange Agent
Registered Securities Processing Unit
One First National Plaza
Suite 0124
Chicago, Illinois 60670-0124
By Facsimile Transmission
(For Eligible Institutions Only):
(312) 407-1067 or (212) 240-8938
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(800) 524-9472 (Chicago) or (212) 240-8800 (New York)
The Information Agent is:
Any questions or requests for assistance or additional copies of this
Offering Circular/Prospectus, the Letter of Transmittal and the
Nonparticipation Election Letter may be directed to the Information Agent at
its telephone number and location set forth above. You may also contact your
broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the Offers.
The Dealer Manager for the Offers is:
Merrill Lynch & Co.
APPENDIX A
Appendix A - Graphic Information Omitted from Electronic Filing
The diagram is entitled "Diagram of Offers". The diagram includes boxes
representing SunAmerica, the General Partners, the Partnership and the Holders
of Series B Preferred. Arrows between such boxes depict the exchange of
Series B Preferred for Junior Subordinated Debentures by SunAmerica in the
SunAmerica Offer and the delivery of Junior Subordinated Debentures to the
Partnership in exchange for Preferred Securities in the Partnership Offer.
There are two explanatory notes at the bottom of the diagram, which state:
bullet Existing Holders of Series B Preferred who participate in the
SunAmerica Offer and the Partnership Offer will receive one Preferred
Security of the Partnership for each outstanding share of Series B
Preferred that is validly tendered and accepted for exchange.
bullet Existing Holders of Series B Preferred who participate in the
SunAmerica Offer and opt out of the Partnership Offer will receive
$25 principal amount of Junior Subordinated Debentures for each
outstanding share of Series B Preferred that is validly tendered and
accepted for exchange.
PART II
INFORMATION NOT REQUIRED IN OFFERING CIRCULAR/PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 2-418 of the Maryland General Corporation law permits the
indemnification of directors, officers, employees and agents of Maryland
corporations. Article Eighth of the form of SunAmerica's Restated Articles of
Incorporation (the "Articles") authorizes the indemnification of directors and
officers to the full extent required or permitted by the General Laws of the
State of Maryland, now or hereafter in force, whether such persons are serving
SunAmerica, or, at its request, any other entity, which indemnification shall
include the advance of expenses under the procedures and to the full extent
permitted by law. Article Eighth further provides that the foregoing rights
of indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled and that no amendment or repeal of
Article Eighth shall apply to or have any effect on any right to
indemnification provided thereunder with respect to acts or omissions
occurring prior to such amendment or repeal. In addition, SunAmerica's
officers and directors are covered by certain directors' and officers'
liability insurance policies maintained by SunAmerica. Reference is made to
section 2-418 of the Maryland General Corporation Law and Article Eighth of
the Articles, which are incorporated herein by reference.
Pursuant to the Limited Partnership Agreement, to the fullest extent
permitted by applicable law, the Partnership shall indemnify and hold harmless
each General Partner, SunAmerica (as initial limited partner), any Special
Representative, any affiliate of a General Partner, SunAmerica or any Special
Representative or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the General Partners, SunAmerica or
any Special Representative, or any employee or agent of the Partnership or its
affiliates (each, an "Indemnified Person") from and against any loss, damage
or claim incurred by such Indemnified Person by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Partnership and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by the
Limited Partnership Agreement, except that no Indemnified Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Indemnified Person by reason of gross negligence or willful misconduct
with respect to such acts or omissions; provided, however, that any such
indemnity shall be provided out of and to the extent of the Partnership's
assets only, and no General Partner or limited partner (collectively,
"Partners"), any affiliate of a Partner or any officers, directors,
shareholders, partners, members, employees, representatives or agents of a
Partner or its respective affiliates, or any employee or agent of the
Partnership or its affiliates or any Special Representative shall have any
personal liability on account thereof. To the fullest extent permitted by
applicable law, expenses (including legal fees) incurred by an Indemnified
Person in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Partnership prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Partnership
of an undertaking by or on behalf of the Indemnified Person to repay such
amount if it shall be determined that the Indemnified Person is not entitled
to be indemnified.
Item 21. Exhibits.
EXHIBIT NO. DOCUMENT
- ---------- --------
1.1 Form of Dealer Manager Agreement(*)
4.1 Form of Indenture between SunAmerica and The
First National Bank of Chicago, as Trustee(*)
4.2 Form of First Supplemental Indenture to
Indenture(*)
4.3 Certificate of Limited Partnership of
SunAmerica Capital, L.P.(*)
4.4 Form of Amended and Restated Agreement of
Limited Partnership of SunAmerica Capital,
L.P.(*)
4.5 Form of Preferred Security (included in Exhibit
4.4 above)(*)
4.6 Form of Junior Subordinated Debenture (included
in Exhibit 4.2)(*)
4.7 Form of Guarantee Agreement with respect to
Preferred Securities(*)
4.8 Form of Action of General Partners of
SunAmerica Capital, L.P. creating the Preferred
Securities(*)
4.9 Senior Indenture, dated as of December 15,
1991, between SunAmerica and Bank of America NT
& SA (formerly Security Pacific National Bank),
as Trustee, defining the rights of the holders
of SunAmerica's 9% Notes due January 15, 1995
and 9.95% Debentures due February 1, 2012, is
incorporated herein by reference to Exhibit No.
4.1 to SunAmerica's Registration Statement No.
33-44084 on Form S-3, filed November 20, 1991.
4.10 Senior Debt Indenture, dated as of April 15,
1993, between SunAmerica and the First National
Bank of Chicago, as Trustee, defining the
rights of the holders of SunAmerica's 8 1/8%
Debentures due April 28, 2023 and certain other
debt securities of SunAmerica, is incorporated
herein by reference to Exhibit 4(h) to
SunAmerica's Annual Report on Form 10-K, filed
December 16, 1993.
4.11 Tri-Party Agreement, dated as of July 1, 1993,
among The First National Bank of Chicago, Bank
of America, NT & SA and SunAmerica, appointing
The First National Bank of Chicago as Successor
Trustee to Bank of America NT & SA for
SunAmerica's 9% Notes due January 15, 1995 and
9.95% Debentures due February 1, 2012, is
incorporated herein by reference to Exhibit
4(i) to SunAmerica's Annual Report on Form
10-K, filed December 16, 1993.
5.1 Opinion of Davis Polk & Wardwell(*)
5.2 Opinion of Susan L. Harris(*)
5.3 Opinion of Piper & Marbury(*)
8.1 Tax Opinion of Davis Polk & Wardwell(*)
12.1 Computations of consolidated ratio of earnings
to fixed charges and consolidated ratio of
earnings to combined fixed charges and
preferred stock dividends
23.1 Consent of Price Waterhouse LLP
23.2 Consents of Davis Polk & Wardwell (included in
Exhibits 5.1 and 8.1 above)(*)
23.3 Consent of Susan L. Harris (included in Exhibit
5.2 above)(*)
23.4 Consent of Piper & Marbury (included in Exhibit
5.3 above)(*)
24.1 Powers of Attorney (included on signature pages)
25.1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of
The First National Bank of Chicago, as Trustee
under the Indenture
99.1 Proposed Form of Letter of Transmittal(*)
99.2 Proposed Form of Nonparticipation Election
Letter(*)
99.3 Proposed Form of Notice of Guaranteed Delivery(*)
99.4 Proposed Form of Letter to Registered Holders
and DTC Participants(*)
99.5 Proposed Form of Letter to Clients(*)
99.6 Form of Exchange Agent Agreement(*)
99.7 Form of Information Agent Agreement(*)
99.8 Form of Newspaper Announcement(*)
- ------------------------
* To be filed by amendment.
Item 22. Undertakings.
Each of the Registrants hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of SunAmerica's Annual Report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to be
a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrants pursuant to the foregoing provisions, or otherwise,
the Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrants will, unless
in the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(3) To respond to requests for information that is incorporated by
reference into the Offering Circular/Prospectus pursuant to Item 4, 10(b), 11
or 13 of Form S-4, within one business day of receipt of such request, and to
send the incorporated documents by first-class mail or equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date responding to
the request.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when it
became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
SunAmerica Inc. has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Los Angeles, State of California, on this 20th day of December, 1994.
SUNAMERICA INC.
By /s/ James R. Belardi
------------------------------
Name: James R. Belardi
Title: Senior Vice President
and Treasurer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Eli Broad, Jay S. Wintrob and
Susan L. Harris, and each of them, as his or her true and lawful
attorneys-in-fact, and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his or her substitute or substitutes, shall do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ------ -----
<S> <C> <C>
/s/ Eli Broad Chairman, President and Chief December 20, 1994
- -------------------------------------- Executive Officer (Principal
Eli Broad Executive Officer) of SunAmerica
Inc. and President (Principal
Executive Officer) of SunAmerica
Financial, Inc.
/s/ James R. Belardi Senior Vice President and December 20, 1994
- -------------------------------------- Treasurer (Principal Financial
James R. Belardi Officer)
/s/ Scott L. Robinson Senior Vice President and December 20, 1994
- -------------------------------------- Controller (Principal
Scott L. Robinson Accounting Officer)
/s/ Ronald J. Arnault Director December 20, 1994
- --------------------------------------
Ronald J. Arnault
/s/ Karen Hastie-Williams Director December 20, 1994
- --------------------------------------
Karen Hastie-Williams
/s/ David O. Maxwell Director December 20, 1994
- --------------------------------------
David O. Maxwell
/s/ Barry Munitz Director December 20, 1994
- --------------------------------------
Barry Munitz
/s/ Lester Pollack Director December 20, 1994
- --------------------------------------
Lester Pollack
/s/ Richard D. Rohr Director December 20, 1994
- --------------------------------------
Richard D. Rohr
/s/ Sanford C. Sigoloff Director December 20, 1994
- --------------------------------------
Sanford C. Sigoloff
/s/ Harold M. Williams Director December 20, 1994
- --------------------------------------
Harold M. Williams
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
SunAmerica Capital, L.P. has duly caused this Registration Statement on Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Los Angeles, State of California, on this 20th day of December,
1994.
By SUNAMERICA FINANCIAL, INC.,
as General Partner
By /s/ Scott L. Robinson
------------------------
Name: Scott L. Robinson
Title:Treasurer
By CAPITOL LIFE MORTGAGE CORP.,
as General Partner
By /s/ Jay S. Wintrob
----------------------
Name: Jay S. Wintrob
Title:President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Eli Broad, Jay S. Wintrob and
Susan L. Harris, and each of them, as his or her true and lawful
attorneys-in-fact, and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his or her substitute or substitutes, shall do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ------ -----
<S> <C> <C>
/s/ Jay S. Wintrob President (Principal Executive December 20, 1994
- ------------------------------------ Officer) of Capitol Life Mortgage
Jay S. Wintrob Corp.
/s/ Scott L. Robinson Treasurer (Principal Financial Officer December 20, 1994
- ----------------------------------- and Principal Accounting Officer) of
Scott L. Robinson SunAmerica Financial, Inc. and
Capitol Life Mortgage Corp.
</TABLE>
EXHIBIT INDEX
EXHIBIT NO. DOCUMENT PAGE
- ----------- -------- ------
1.1 Form of Dealer Manager Agreement(*)
4.1 Form of Indenture between SunAmerica and The
First National Bank of Chicago, as Trustee(*)
4.2 Form of First Supplemental Indenture to
Indenture(*)
4.3 Certificate of Limited Partnership of
SunAmerica Capital, L.P.(*)
4.4 Form of Amended and Restated Agreement of
Limited Partnership of SunAmerica Capital,
L.P.(*)
4.5 Form of Preferred Security (included in
Exhibit 4.4 above)(*)
4.6 Form of Junior Subordinated Debenture
(included in Exhibit 4.2)(*)
4.7 Form of Guarantee Agreement with respect to
Preferred Securities(*)
4.8 Form of Action of General Partners of
SunAmerica Capital, L.P. creating the
Preferred Securities(*)
4.9 Senior Indenture, dated as of December 15,
1991, between SunAmerica and Bank of America
NT & SA (formerly Security Pacific National
Bank), as Trustee, defining the rights of the
holders of SunAmerica's 9% Notes due January
15, 1995 and 9.95% Debentures due February 1,
2012, is incorporated herein by reference to
Exhibit No. 4.1 to SunAmerica's Registration
Statement No. 33-44084 on Form S-3, filed
November 20, 1991.
4.10 Senior Debt Indenture, dated as of April 15,
1993, between SunAmerica and the First
National Bank of Chicago, as Trustee, defining
the rights of the holders of SunAmerica's 8
1/8% Debentures due April 28, 2023 and certain
other debt securities of SunAmerica, is
incorporated herein by reference to Exhibit
4(h) to SunAmerica's Annual Report on Form 10-K,
filed December 16, 1993.
4.11 Tri-Party Agreement, dated as of July 1, 1993,
among The First National Bank of Chicago, Bank
of America, NT & SA and SunAmerica, appointing
The First National Bank of Chicago as
Successor Trustee to Bank of America NT & SA
for SunAmerica's 9% Notes due January 15, 1995
and 9.95% Debentures due February 1, 2012, is
incorporated herein by reference to Exhibit
4(i) to SunAmerica's Annual Report on Form
10-K, filed December 16, 1993.
5.1 Opinion of Davis Polk & Wardwell(*)
5.2 Opinion of Susan L. Harris(*)
5.3 Opinion of Piper & Marbury(*)
8.1 Tax Opinion of Davis Polk & Wardwell(*)
12.1 Computations of consolidated ratio of earnings
to fixed charges and consolidated ratio of
earnings to combined fixed charges and
preferred stock dividends
23.1 Consent of Price Waterhouse LLP
23.2 Consents of Davis Polk & Wardwell (included in
Exhibits 5.1 and 8.1 above)(*)
23.3 Consent of Susan L. Harris (included in
Exhibit 5.2 above)(*)
23.4 Consent of Piper & Marbury (included in
Exhibit 5.3 above)(*)
24.1 Powers of Attorney (included on signature pages)
25.1 Statement of Eligibility under the Trust
Indenture Act of 1939, as amended, of
The First National Bank of Chicago, as Trustee
under the Indenture
99.1 Proposed Form of Letter of Transmittal(*)
99.2 Proposed Form of Nonparticipation Election
Letter(*)
99.3 Proposed Form of Notice of Guaranteed
Delivery(*)
99.4 Proposed Form of Letter to Registered Holders
and DTC Participant(s*)
99.5 Proposed Form of Letter to Clients(*)
99.6 Form of Exchange Agent Agreement(*)
99.7 Form of Information Agent Agreement(*)
99.8 Form of Newspaper Announcement(*)
- -------------------------
* To be filed by amendment.
Exhibit 12.1
SUNAMERICA INC.
COMPUTATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES & PREFERRED STOCK
DIVIDENDS
(EXCLUDING INTEREST ON FIXED ANNUITIES, GUARANTEED INVESTMENT CONTRACTS &
TRUST DEPOSITS)
<TABLE>
<S> <C> <C> <C> <C> <C>
Years ended September 30,
1990 1991 1992 1993 1994
--------------- --------------- ----------- ----------- -----------
(In thousands, except ratios)
Earnings:
Pretax income $ 60,867 $ 73,381 $ 111,091 184,011 $ 240,001
--------------- --------------- ----------- ----------- -----------
Add:
Interest incurred on:
Senior indebtedness 31,436 33,072 33,224 36,246 50,292
Subordinated notes 13,003 10,473 3,941 -- --
--------------- --------------- ----------- ----------- -----------
Total interest
incurred 44,439 43,545 37,165 36,246 50,292
--------------- --------------- ----------- ----------- -----------
Total earnings $ 105,306 $ 116,926 $ 148,256 $ 220,257 $ 290,293
=============== =============== =========== =========== ===========
Combined Fixed Charges and Preferred Stock Dividends:
Interest incurred on:
Senior indebtedness $ 31,436 $ 33,072 $ 33,224 $ 36,246 $ 50,292
Subordinated notes 13,003 10,473 3,941 -- --
--------------- --------------- ----------- ----------- -----------
Total interest
incurred 44,439 43,545 37,165 36,246 50,292
Tax equivalent basis of
preferred stock
dividends 8,362 8,369 17,733 42,675 54,528
--------------- --------------- ----------- ----------- -----------
Total combined fixed
charges and preferred
stock dividends $ 52,801 $ 51,914 $ 54,898 $ 78,921 $ 104,820
=============== =============== =========== =========== ===========
Ratio of earnings to combined
fixed charges and preferred
stock dividends (excluding
interest incurred on fixed
annuities, guaranteed
investment contracts and
trust deposits) 2.0 2.3 2.7 2.8 2.8
=============== =============== =========== =========== ===========
</TABLE>
EXHIBIT 12.1 (CONTINUED)
SUNAMERICA INC.
COMPUTATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES & PREFERRED STOCK
DIVIDENDS
(INCLUDING INTEREST ON FIXED ANNUITIES, GUARANTEED INVESTMENT CONTRACTS &
TRUST DEPOSITS)
<TABLE>
<S> <C> <C> <C> <C> <C>
Years ended September 30,
1990 1991 1992 1993 1994
-------------- -------------- ----------- ----------- -----------
(In thousands, except ratios)
Earnings:
Pretax income $ 60,867 $ 73,381 $ 111,091 $ 184,011 $ 240,001
-------------- -------------- ----------- ----------- -----------
Add:
Interest incurred on:
Fixed annuity contracts 403,775 411,084 362,094 308,910 254,464
Guaranteed investment
contracts 87,280 124,381 140,114 136,984 150,424
Trust deposits 2,909 -- 4,256 8,438 8,516
Senior indebtedness 31,436 33,072 33,224 36,246 50,292
Subordinated notes 13,003 10,473 3,941 -- --
-------------- -------------- ----------- ----------- -----------
Total interest
incurred 538,403 579,010 543,629 490,578 463,696
-------------- -------------- ----------- ----------- -----------
Total earnings $ 599,270 $ 652,391 $ 654,720 $ 674,589 $ 703,697
============== ============== =========== =========== ===========
Combined Fixed Charges and Preferred Stock Dividends:
Interest incurred on:
Fixed annuity contracts $ 403,775 $ 411,084 $ 362,094 $ 308,910 $ 254,464
Guaranteed investment
contracts 87,280 124,381 140,114 136,984 150,424
Trust deposits 2,909 -- 4,256 8,438 8,516
Senior indebtedness 31,436 33,072 33,224 36,246 50,292
Subordinated notes 13,003 10,473 3,941 -- --
-------------- -------------- ----------- ----------- -----------
Total interest
incurred 538,403 579,010 543,629 490,578 463,696
Tax equivalent basis
of preferred stock
dividends 8,362 8,369 17,733 42,675 54,528
-------------- -------------- ----------- ----------- -----------
Total combined fixed
charges and preferred
stock dividends $ 546,765 $ 587,379 $ 561,362 $ 533,253 $ 518,224
============== ============== =========== =========== ===========
Ratio of earnings to combined
fixed charges and preferred stock
dividends (including interest
incurred on fixed annuities,
guaranteed investment contracts
and trust deposits) 1.1 1.1 1.2 1.3 1.4
============== ============== =========== =========== ===========
</TABLE>
EXHIBIT 12.1 (CONTINUED)
SUNAMERICA INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(EXCLUDING INTEREST ON FIXED ANNUITIES, GUARANTEED INVESTMENT CONTRACTS &
TRUST DEPOSITS)
<TABLE>
<S> <C> <C> <C> <C> <C>
Years ended September 30,
1990 1991 1992 1993 1994
----------- ----------- ------------ ------------ ------------
(In thousands, except ratios)
Earnings:
Pretax income $ 60,867 $ 73,381 $ 111,091 $ 184,011 $ 240,001
----------- ----------- ------------ ------------ ------------
Add:
Interest incurred on:
Senior indebtedness 31,436 33,072 33,224 36,246 50,292
Subordinated notes 13,003 10,473 3,941 -- --
----------- ----------- ------------ ------------ ------------
Total interest
incurred 44,439 43,545 37,165 36,246 50,292
----------- ----------- ------------ ------------ ------------
Total earnings $ 105,306 $ 116,926 $ 148,256 $ 220,257 $ 290,293
=========== =========== ============ ============ ============
Fixed Charges:
Interest incurred on:
Senior indebtedness $ 31,436 $ 33,072 $ 33,224 $ 36,246 $ 50,292
Subordinated notes 13,003 10,473 3,941 -- --
----------- ----------- ------------ ------------ ------------
Total fixed charges $ 44,439 $ 43,545 $ 37,165 $ 36,246 $ 50,292
=========== =========== ============ ============ ============
Ratio of earnings to fixed charges
(excluding interest incurred
on fixed annuities, guaranteed
investment contracts and
trust deposits) 2.4 2.7 4.0 6.1 5.8
=========== =========== ============ ============ ============
</TABLE>
EXHIBIT 12.1 (CONTINUED)
SUNAMERICA INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(INCLUDING INTEREST ON FIXED ANNUITIES, GUARANTEED INVESTMENT CONTRACTS &
TRUST DEPOSITS)
<TABLE>
<S> <C> <C> <C> <C> <C>
Years ended September 30,
1990 1991 1992 1993 1994
------------ ------------ ------------ ----------- ------------
(In thousands, except ratios)
Earnings:
Pretax income $ 60,867 $ 73,381 $ 111,091 $ 184,011 $ 240,001
------------ ------------ ------------ ----------- ------------
Add:
Interest incurred on:
Fixed annuity contracts 403,775 411,084 362,094 308,910 254,464
Guaranteed investment
contracts 87,280 124,381 140,114 136,984 150,424
Trust deposits 2,909 -- 4,256 8,438 8,516
Senior indebtedness 31,436 33,072 33,224 36,246 50,292
Subordinated notes 13,003 10,473 3,941 -- --
------------ ------------ ------------ ----------- ------------
Total interest
incurred 538,403 579,010 543,629 490,578 463,696
------------ ------------ ------------ ----------- ------------
Total earnings $ 599,270 $ 652,391 $ 654,720 $ 674,589 $ 703,697
============ ============ ============ =========== ============
Fixed Charges:
Interest incurred on:
Fixed annuity contracts $ 403,775 $ 411,084 $ 362,094 $ 308,910 $ 254,464
Guaranteed investment
contracts 87,280 124,381 140,114 136,984 150,424
Trust deposits 2,909 -- 4,256 8,438 8,516
Senior indebtedness 31,436 33,072 33,224 36,246 50,292
Subordinated notes 13,003 10,473 3,941 -- --
------------ ------------ ------------ ----------- ------------
Total fixed charges $ 538,403 $ 579,010 $ 543,629 $ 490,578 $ 463,696
============ ============ ============ =========== ============
Ratio of earnings to fixed
charges (including interest
incurred on fixed annuities,
guaranteed investment contracts
and trust deposits) 1.1 1.1 1.2 1.4 1.5
============ ============ ============ =========== ============
</TABLE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of SunAmerica
Inc. of our report dated November 9, 1994 appearing on page F-2 of SunAmerica
Inc.'s Annual Report on Form 10-K for the year ended September 30, 1994. We
also consent to the incorporation by reference of our report on the Financial
Statement Schedules, which appears on page S-2 of such Annual Report on Form
10-K. We also consent to the reference to us under the heading "Experts" in
such Prospectus.
PRICE WATERHOUSE LLP
Los Angeles, California
December 14, 1994
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
-----
---------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
----------------
SUNAMERICA INC.
(Exact name of obligor as specified in its charter)
Maryland 86-0176061
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
1 SunAmerica Center
Los Angeles, California 90067-6022
(Address of principal executive offices) (Zip Code)
Debt Securities
(Title of Indenture Securities)
Item 1. General Information. Furnish the following
information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise corporate
trust powers.
Item 2. Affiliations With the Obligor. If the obligor
is an affiliate of the trustee, describe each
such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a
part of this Statement of Eligibility.
1.A copy of the articles of association of the
trustee now in effect.*
2.A copy of the certificates of authority of the
trustee to commence business.*
3.A copy of the authorization of the trustee to
exercise corporate trust powers.*
4.A copy of the existing by-laws of the trustee.*
5.Not Applicable.
6.The consent of the trustee required by
Section 321(b) of the Act.
7.A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8.Not Applicable.
9.Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Chicago and State of Illinois, on the 16th day of
December, 1994.
The First National Bank of Chicago,
Trustee,
By /s/ R. D. Manella
R. D. Manella
Vice President and Senior Counsel
*Exhibits 1, 2, 3, and 4 are herein incorporated by reference to
Exhibits bearing identical numbers in Item 12 of the Form T-1 of The
First National Bank of Chicago, filed as Exhibit 26(b) to the
Registration Statement on Form S-3 of Dow Capital B.V. and The Dow
Chemical Company, filed with the Securities and Exchange Commission on
June 3, 1991 (Registration No. 33-36314).
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
December 16, 1994
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between SUNAMERICA INC.
and The First National Bank of Chicago, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request
therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ R. D. Manella
R.D. Manella
Vice President and Senior Counsel
EXHIBIT 7
A copy of the latest report of conditions of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
Legal Title of Bank: The First National Bank of Chicago
Call Date: 9/30/94 ST-BK: 17-1630 FFIEC 031
Page RC-1
Address: One First National Plaza, Suite 0460
City, State Zip: Chicago, IL 60670-0460
FDIC Certificate No.: 0/3/6/1/8
---------
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for September 30, 1994
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount
outstanding of the last business day of the quarter.
Schedule RC--Balance Sheet
Dollar Amounts in C400
Thousands RCFD BIL MIL THOU <-
----------------- ---- ------------ --
ASSETS
1. Cash and balances due from
depository institutions
(from Schedule RC-A):
a. Noninterest-bearing
balances and currency
and coin(1) 0081 3,677,034 1.a.
b. Interest-bearing
balances(2) 0071 7,396,406 1.b.
2. Securities
a. Held-to-maturity securities
(from Schedule RC-B,
column A) 1754 169,280 2.a.
b. Available-for-sale
securities (from Schedule
RC-B, column D) 1773 533,138 2.b.
3. Federal funds sold and
securities purchased under
agreements to resell in
domestic offices of the
bank and its Edge and
Agreement subsidiaries, and
in IBFs:
a. Federal Funds sold 0276 3,758,277 3.a.
b. Securities purchased under
agreements to resell 0277 983,109 3.b.
4. Loans and lease financing
receivables:
a. Loans and leases, net of
unearned income (from Schedule
RC-C) RCFD 2122 14,933,756 4.a.
b. LESS: Allowance for loan and
lease losses RCFD 3123 355,626 4.b.
c. LESS: Allocated transfer risk
reserve RCFD 3128 0 4.c.
d. Loans and leases, net of
unearned income, allowance,
and reserve (item 4.a minus
4.b and 4.c) 2125 14,578,130 4.d.
5. Assets held in trading
accounts 3545 9,793,010 5.
6. Premises and fixed assets
(including capitalized
leases) 2145 506,298 6.
7. Other real estate owned
(from Schedule RC-M) 2150 48,699 7.
8. Investments in unconsolidated
subsidiaries and associated
companies (from Schedule RC-M) 2130 7,269 8.
9. Customers' liability to this bank
on acceptances outstanding 2155 583,073 9.
10.Intangible assets (from Schedule
RC-M) 2143 122,763 10.
11.Other assets (from Schedule RC-F) 2160 1,217,250 11.
12.Total assets (sum of items 1
through 11) 2170 43,373,736 12.
- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
Legal Title of Bank: The First National Bank of Chicago
Call Date: 930/94 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Suite 0460
Page RC-2
City, State Zip: Chicago, IL 60670-0460
FDIC Certificate No.: 0/3/6/1/8
---------
Schedule RC-Continued
<TABLE>
<CAPTION>
Dollar Amounts in
Thousands BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13.Deposits:
a. In domestic offices (sum
of totals of columns A
and C from Schedule RC-E,
part 1) RCON 2200 14,587,998 13.a.
(1) Noninterest-bearing(1). RCON 6631 5,788,459 13.a.(1)
(2) Interest-bearing RCON 6636 18,799,539 13.a.(2)
b. In foreign offices, Edge and
Agreement subsidiaries, and
IBFs (from Schedule RC-E,
part II) RCFN 2200 9,974,515 13.b.
(1) Noninterest bearing RCFN 6631 850,522 13.b.(1)
(2) Interest-bearing RCFN 6636 9,123,993 13.b.(2)
14.Federal funds purchased and
securities sold under agreements
to repurchase in domestic
offices of the bank and of
its Edge and Agreement
subsidiaries, and in IBFs:
a. Federal funds purchased RCFD 0278 2,211,005 14.a.
b. Securities sold under
agreements to repurchase RCFD 0279 765,393 14.b.
15.a. Demand notes issued to
the U.S. Treasury RCFD 2840 102,201 15.a.
b. Trading Liabilities RCFD 3548 6,291,743 15.b.
16.Other borrowed money:
a. With original maturity of
one year or less RCFD 2332 3,237,167 16.a.
b. With original maturity of
more than one year RCFD 2333 491,176 16.b.
17.Mortgage indebtedness and
obligations under capitalized
leases RCFD 2910 275,794 17.
18.Bank's liability on acceptance
executed and outstanding RCFD 2920 583,073 18.
19.Subordinated notes and
debentures RCFD 3200 1,325,000 19.
20.Other liabilities (from
Schedule RC-G) RCFD 2930 638,753 20.
21.Total liabilities (sum of
items 13 through 20) RCFD 2948 40,483,818 21.
22.Limited-Life preferred
stock and related surplus RCFD 3282 0 22.
EQUITY CAPITAL
23.Perpetual preferred stock
and related surplus RCFD 3838 0 23.
24.Common stock RCFD 3230 200,858 24.
25.Surplus (exclude all surplus
related to preferred
stock) RCFD 3839 2,289,398 25.
26. a. Undivided profits and
capital reserves RCFD 3632 403,835 26.a.
b. Net unrealized holding
gains (losses) on available-
for-sale securities RCFD 8434 (3,441) 26.b.
27.Cumulative foreign currency
translation adjustments RCFD 3284 (732) 27.
28.Total equity capital (sum
of items 23 through 27) RCFD 3210 2,889,918 28.
29.Total liabilities, limited-
life preferred stock, and
equity capital (sum of
items 21, 22, and 28) RCFD 3300 43,373,736 29.
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed for
the bank by independent external Number
auditors as of any date during 1993 RCFD6724 N/A M.1.
1 =Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm
which submits a report on the bank
2 =Independent audit of the bank's parent holding company
conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which
submits a report on the consolidated holding company
(but not on the bank separately)
3 =Directors' examination of the bank conducted in
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
4.=Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 =Review of the bank's financial statements by external auditors
6 =Compilation of the bank's financial statements by external auditors
7 =Other audit procedures (excluding tax preparation work)
8 =No external audit work
- ---------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
